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Retired farmers can exclude some carryover crop payments from Social Security
Social Security generally withholds benefits if earnings exceed the annual limit, but it requires farmers to provide documentation so it can exclude carryover crop payments tied to pre-retirement work.
Housing-related category aside, the Social Security earnings test can catch some newly retired farmers because payments tied to prior work may arrive after they start collecting benefits, according to Yahoo Finance.
Yahoo Finance reports that retired farmers claiming Social Security before full retirement age can exclude certain carryover crop payments from the $24,480 earnings limit if the work predates their benefits, because Social Security typically checks the net farm income figure on a tax return rather than the timing of the underlying labor.
The outlet notes that farmers need to proactively provide crop records to avoid improper benefit withholding, since Social Security cannot determine which crop year the income belongs to without help.
It also cautions that excluding carryover crop income from the earnings test does not mean it is tax-free overall, because it can still affect Medicare premiums and the taxation of Social Security benefits.