Earned income is income earned from performing work. Prizes, 401(k) withdrawals, and other payments not connected with work are not "Earned" income. Earned income is also subject to social security tax.
Until your full retirement age, having Earned income will reduce your social security checks. But, the earned income will also go on your earning record with the social security administration and may increase your future payouts, depending on your earnings history. Unearned income does not reduce your social security checks.
Separately, social security is tax-free if you have no other income or if your income is less than the threshold. Having any kind of income over the threshold will make your social security taxable, even though only earned income will reduce your payments.
