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Ask Megan C Your Own Question
Megan C
Megan C, Certified Public Accountant (CPA)
Category: Social Security
Satisfied Customers: 16579
Experience:  Licensed CPA, CMA, CFE, CGMA M.Accy Also Teach Accounting courses at Master's Level
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I retired December 31, 2011. My first Social Security payment

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I retired December 31, 2011. My first Social Security payment was January 18, 2012. On July 8, 2013 I received a letter from Social Security saying they over paid me
7,139.70. This was based on 2012 tax information. I called the Local Office and explained that this was work done in 2011 and for a lump sum vacation pay out. The gentleman said no problem just get a letter from your employer stating that. I did. It read in part' "Mr Spalding was issued two payments in 2012 totaling 28,994.29. The first payment, in the amount of 10,320.00 issued on 01/01/12, was for service performed during the month of December 2011. The second payment, in the amount of 18,674.29 dates 01/05/12, was payment for lump sum vacation pay out." Social Security responded by saying. "THE OVERPAYMENT CAME FROM YOUR EARNINGS AND THE FACT THAT YOU RETIRED EARLY, BEFORE 66. YOUR EARNINGS, AT THE TIME, EXCEEDED THE LIMIT. YOU ARE NOW 66 AND EARNINGS NO LONGER MATTER."
First off I am not sure what their statement means and I believe that at least my vacation pay out should not be considered as 2012 earnings, and perhaps not even the December 2011 earnings Am I right?

MyVirtualCPA :

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

MyVirtualCPA :

How are you today?

MyVirtualCPA :

You may be out of luck for the payment you received in January, but there is a special rule for your first year of drawing a benefit before full retirement age.

MyVirtualCPA :

Basically, any month that you earn less than $1,260 you can get a full benefit amount for that month

MyVirtualCPA :

So, it sounds like the bulk of your earnings were received in January. In that event you should be okay for the rest of the year

MyVirtualCPA :

Unfortunately, you will have to take proof of this to the social security office and meet with someone face to face.

MyVirtualCPA :

Here is details on the first year rule:

MyVirtualCPA :

http://www.ssa.gov/retire2/rule.htm

Customer:

Thanks. Does vacation pay count as earnings?

MyVirtualCPA :

yes, vacation pay counts as earnings

Customer:

(last question) And I need to pay on this even if it was earned well before I retired?

MyVirtualCPA :

Unfortunately, yes -because they go by the year that the earnings were reported to the IRS. However, this should only impact you in January

MyVirtualCPA :

You should get your full amount for the rest of the months

Customer:

Thanks

MyVirtualCPA :

You're welcome

MyVirtualCPA :

If you would, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

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