Workers who pay into Social Security earn credits quarterly that qualify them for certain types of Social Security payments, whether they be disability or retirement benefits, but few people understand what sorts of income actually earn them credits. Here is some information about what types of income qualify under the earnings test.
What types of income count under the earnings test?
The following types of earnings count for earnings test purposes:
- All wages for employment covered by Social Security (see Chapter 13);
- All cash pay (even if not considered as “wages” under the cash-pay test explained in §901 and §1303) for:
- Agricultural work;
- Domestic work in a private home; or
- Service not in the course of the employer’s trade or business;
- All pay, cash and non-cash, for work as a home worker or for a nonprofit organization whether or not the $100 per year test is met (see §931);
- Cash tips that equal or exceed $20 a month (see §1329);
- All pay for work not covered by Social Security, if the work is done in the U.S., including pay for:
- Family employment;
- Work by students, student nurses, interns, newspaper and magazine vendors;
- Work for Federal or State or foreign governments or instrumentalities; or
- Work covered by the Railroad Retirement Act;
- All net earnings from self-employment;
- All pay for incentive, suggestion, and outstanding work awards;
- All pay for occasional and regular bonuses;
- All pay from a “cafeteria” plan if the payments meet the definition of wages and the plan is not a “qualified benefit”;
- All pay from a non-qualified deferred compensation plan/system;
- All pay by an employer for educational assistance;
- All pay from federally sponsored economic and human development programs only if payments are wages;
- All pay for non-work periods including idle time, standby, and subject to call related payments;
- All pay for prizes, awards and gratuities only if it is part of the salesperson’s wage structure; and
- All pay from television, radio and motion picture residuals if the performer was an employee at the time of the original performance.
