AUSTIN EDITION - COL Taking holiday earnings into consideration
"Welcome to Wal-Mart!" "Would you like to super-size that order?" "May I show you something in a different size?"
These are some of the phrases and questions you might start practicing if you're among the millions of Americans who take seasonal jobs during the holidays to bring in a little extra spending money.
If your paycheck will augment your Social Security check, you've probably got some extra questions. "Will the money I make mess up my Social Security check?" "Do they take Social Security taxes out of my paycheck when I'm already getting benefits?" "If they do, will the extra taxes I pay increase my Social Security check?"
The quick answers, respectively, are: no; yes; and probably not. But here are the explanations.
If you're age 65 or older, you can make a million dollars during the holidays, and we won't take a nickel out of your Social Security benefits. However, if you're younger than 65, you're stuck with some limits on your earnings. But chances are you won't go over those limits, so you should be OK. In 2002, the earnings threshold is $11,280. For every $2 you earn more than that, $1 must be withheld from your Social Security check. So unless you were working earlier in the year, your holiday earnings probably will not put you over the $11,280 limit. If you turned 65 in 2002, your earnings threshold is $30,000 for the months before you turned 65.
If your holiday work carries over into 2003, a whole new clock starts ticking. The earnings threshold will go up to $11,520 effective Jan. 1, 2003. Also, the so-called "full retirement age" goes up to age 65 and two months in 2003. In other words, if you are under age 65 and two months in 2003, $1 will be deducted from your benefits for every $2 you earn over $11,520. If you will turn age 65 and two months in 2003, your earnings threshold is $30,720 for the months before you turn full retirement age. But once you reach age 65 and two months, there is no limit on your earnings.
No matter which year you are working, you will have to pay Social Security taxes on your holiday earnings. Your employer is required to withhold payroll taxes whether you're 16 years old or 116 years old and whether you're a Social Security recipient or not.
There is a slim chance those taxes you pay and the earnings they represent could translate into extra Social Security benefits. Here's how that works. When we figured your original Social Security benefit, we based it on your average monthly wage using the highest earnings on your Social Security record. If the money you made during the holidays -- and the rest of 2002 -- raises your lifetime average monthly wage, then we will refigure your benefit and give you any increase due. Most people don't get such an increase because their holiday earnings are just not enough to raise their average monthly wage. But if your extra earnings do mean extra benefits, you'll automatically get the increase sometime during 2003 with payments retroactive to January.
For more information, visit our Web site at www.ssa.gov or call 1-800-772-1213. If you are deaf or hard of hearing, you can call our TTY number, 1-800-325-0778.
Cherryl Kjos is the Social Security district manager in Austin.