Will it cost me my social security disability to get a job?
Will it cost me my social security disability to get a job?

Will it cost me my social security disability to get a job?

Dear Penny,

I receive full disability from Social Security. I am 64 and went out on disability as a 48 year old. (I was born in 1957.)

Since there is now a shortage of labor, I thought I might like to try to return to work. Social Security has a Ticket to Work program that gives you a limited amount of time to try to work without losing your benefits. Is there a downside to trying to return to an office job? I think I can work part time and earn less than $ 1,000 a month without disturbing my benefits.

Right now, I do not pay any income tax either. Would I really earn anything if I went back to work just to get a tax bill to wipe out my earnings?

-L.

Robin Hartill [ The Penny Hoarder ]

Dear L.,

Getting approved for Social Security Disability Insurance (SSDI) is such a long and complex process, so I understand why you do not want to put your benefits at risk. But I do not see the great disadvantage of what you are proposing.

The Ticket to Work program provides training, career counseling and help finding a job for people who are disabled and want to work again. You can find out more about the services the programs offer selectwork.ssa.gov.

However, you do not need to use Ticket to Works services to qualify for a trial period. Basically, as long as you still have a disability, Social Security allows you to test a new job for up to nine months without affecting your benefits. There is no limit to how much you can earn during these nine months.

From 2022, any month you earn over $ 970 or work at least 80 hours if you are self-employed will count as one of your probationary months. Social security would only consider your disability to have ceased if you spent nine months of probation over a 60-month period. But as long as you kept your income below $ 970 for every month you work, it would not count as a trial month.

Once you have completed a trial period of nine months, you can keep your disability in any month where you do not earn enough to have what Social Security calls significant earnings for the next 36 months. In 2022, you can earn up to $ 1,350 a month or $ 2,260 a month if you are blind. However, there is no middle ground here. If you are not blind and you earn $ 1,351 in a month, you would not get your handicap for that month.

Even if you would spend nine months trying, you would not jeopardize your long-term benefits because of your age. You are about two years away from full retirement age, after which your disability benefit is converted to your pension benefit. Then you can work as much as you want without affecting your social security. You also would not risk your Medicare when you turn 65 this year.

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A few other benefits to consider: By working, you would pay into social security, which could increase your retirement benefit. When you make money on a job, you can also contribute to a retirement account, such as a 401 (k) or IRA.

The tax part of the equation complicates things a bit. Although you would probably end up paying taxes, I do not think Uncle Sam would take too much of a bite. We have a progressive tax system that gradually increases tax rates according to income.

Suppose you have $ 20,000 in income from Social Security disability plus $ 10,000 in salary for the year, bringing your income to $ 30,000 for the year. Between federal taxes (which would apply to both your earnings and part of your social security) and payroll taxes (which would only apply to your earnings), you would end up paying just over $ 1,500.

Ultimately, it’s your question whether it’s worth paying a little in taxes to get a job. The point is, you do not have to worry about taxes eliminating the benefits of working.

As long as you feel you can work without risking your health, I would vote to at least apply for a few jobs to explore your options. Along with office jobs, you may also want to look at work from home, as teleworking is the new normal for so many companies.

The current labor market offers so many opportunities, especially for older workers or those with a disability who often face many barriers when looking for work. Since you have opportunities to work without risking your benefits, why not take advantage of it?

• • •

Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. Send your difficult money questions to [email protected].

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