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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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I began collecting SS at age 62 in 2011. In 2012 I received

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I began collecting SS at age 62 in 2011. In 2012 I received a settlement in an age descrimination lawsuit against my employer. Half was paid as 1099 the other half as W2. The W2 amt is approx 63,000. SS is counting this as earned income and claim I was overpaid in benefits in 2012 by 18,000 which I must repay. Is this earned income or not?

MyVirtualCPA :

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

MyVirtualCPA :

How are you tonight?

MyVirtualCPA :

I hate to be the bearer of bad news, but this income that was received on a W-2 is considered earned income.

MyVirtualCPA :

It is wages, and wages are earned income regardless of the fact that they were received after your service ended

MyVirtualCPA :

These are wages that your employer owed you, and are earned in the period that they are paid

MyVirtualCPA :

I'm sorry if this is not the news you had hoped to hear. Had there been better news to report, I would have been thrilled to deliver that news. Please don't shoot the messenger! Negative ratings punish me for my honesty.

Customer:

So if this was paid entirely as 1099 I would not have this problem?

MyVirtualCPA :

It depends on the nature of the claim, yes. So , if these were simply damages and not classified as wages then it would not have been a problem.

MyVirtualCPA :

But, in the nature of your claim there is a part that is allocated to salary and another part that is allocated to damages

Customer:

I see. Wish I had known this when settlement was made.

Customer:

Thanks you.

MyVirtualCPA :

You're welcome. Is there anything else

MyVirtualCPA :

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

Customer:

no and thanks again.

MyVirtualCPA :

You're welcome. Please don't forget to rate.

Megan C and other Social Security Specialists are ready to help you