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Ask Megan C Your Own Question
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 16576
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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1. I am going to take early retirement starting in Jan 2014.

This answer was rated:

1. I am going to take early retirement starting in Jan 2014. I have a side S corp pass thru consulting LLC that is active but makes no income presently In january I can take on a client in the "s" Corp that will Pay about 24000 annually. ( well above SS earnings limit) If the S Corp just pays me the SS earning Limit, will the balance of the funds in the s corp penalize my SS amount?

2.) Is a pension (not 401k) and annuities consider earned income under the earnings Limit?

MyVirtualCPA :

I realize you have a question about social security. My goal is to help you better understand your options.

MyVirtualCPA :

How are you?

MyVirtualCPA :

Your S Corp earnings will only apply to the salary portion of your pay - the rest is considered a 'dividend' and is not earned income. If your gross is $24,000 you could reasonably pay yourself the earnings limit. However, if you grossed $50,000 to $100,000 or more, it would not be "reasonable" to pay yourself the minimum, and if the IRS reclassified some of your income as wages then you would run afoul with SSA too...but in your situation, that's won't be a problem since your earnings will be a "reasonable" amount of your gross

MyVirtualCPA :

second, your pension and annuities do NOT count towards your earnings limit - they are unearned income.

Customer:

Thankyou that's all I needed

MyVirtualCPA :

You're welcome. Please rate my response as "excellent" so that I may receive credit for assisting you today

Customer:

you got it

Megan C and other Social Security Specialists are ready to help you
Thanks, Michael for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, and social security needs. IT was a pleasure working with you today.

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