can Social Security income benefit be reduced by 1/3 why

[homerandsue]

Can SS income be reduced by credits

[xmasbaby0]

What credits are you referring to?    Are you still working at less than full retirement age and collecting SS?

Before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)  For 2024, $22,320.

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2024 Form 1040

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is

Single or Head of Household      $25,000

Married Filing Jointly                  $32,000

Married Filing Separately            $0

Some additional information:  There are 9 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

[Opus 17]

If you claim your benefit before "full retirement age" but you keep working, your benefit for next year can be reduced by how much you work this year.  However, if you are at or older than your full retirement age, then continuing to work will not reduce your benefit.  

Separately, if you continue to work after taking your benefit, you might increase your benefit by increasing your credits, but you will not reduce your benefit.  Your benefit is based on your average income over the top 35 wage-earning years.   If you earn more than the average, it may increase your benefit, but if you earn less than your average, it won't reduce your benefit. 

No matter how old you are or whether or not you continue to work, your SS benefit can be taxed if your other income (from working, prizes, pension, etc.) is more than a certain threshold.