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I will be eligible for Social Security next year. But I also receive oil royalties and will be receiving funds from a salt water disposal site on my property. Will my social security be eliminated because of this income, or is it considered "passive" income thus not affecting what I've earned from working over 40 years.
If you are simply retiring and eligible for social security benefits due to age and having paid into SS for 40 quarters, then no the extra income will not change any benefits provided by social security. If you were getting social security benefits for disability and were not retirement age eligible, it may impact your SS benefits.
I am not a tax lawyer, but believe that if you make more than the allotted amount you will be subject to income tax on your social security. I know several persons who are required to pay estimated taxes because their income is more than the allotted amount that you can make and not pay taxes on social security. I suggest you contact a CPA or tax lawyer in your area, particularly one with experience with royalty income, to help guide you through the tax issues.
Good luck!
Royalties are considered unearned income for Social Security purposes unless you participate in the well. The royalties will not preclude you from receiving your Social Security benefits. If you participate in the drilling of a well, you are working for Social Security purposes. There is no restriction to your work once you reach your full retirement age.
This is also what I was led to believe after going over the S.S. pages I found online, And I believe this to be correct. My taxman has always told me I did not have to pay taxes on royalty, but bonuses were a different matter. Is he right about that? My S.S. benefits are different from other folks because it is a "survivor" benefit, while my actual S.S. is left untouched. Comments would be helpful thanks,
Kristopher Salter said:
Royalties are considered unearned income for Social Security purposes unless you participate in the well. The royalties will not preclude you from receiving your Social Security benefits. If you participate in the drilling of a well, you are working for Social Security purposes. There is no restriction to your work once you reach your full retirement age.