Benefits Overpayment and Repayment

[DoubleStrike]

Let's say a man receives survivors benefit per his spouse's death.

Let's say his benefit was $8000 for 2011, but $4000 was repaid in 2011 (for overpayment in 2010) so his net benefit was $4000 for 2011. The earning limit of 2011 is $14,160 and he made $30,000 from his job in 2011. SS calculated that he earned $15,840 above the allowed amount (which I agree). Since he has not reached his full retirement age, SS deducts $1 in benefit for every $2 you earn over allowed amount, so SS says the amount that should have been witheld is ($14,160 / 2) $7,080 so that is the overpayment amount to that should have been witheld according to SS.

What I do not understand is after this $7,080 of amount that should have been witheld was calculated, do you not deduct $4000 repaid in 2011 for overpayment in 2010, to be able to caclulate the overpayment in 2011? If yes, then the overpayment for 2011 will be ($7,080 - $4,000) $3,080.

To me, it doesn't sound like it makes sense that the overpayment is bigger than the amount actually paid (Net Benefit) during the year.

Your advice will be appreciated. Thank you.

Does anyone know if my reasoning is correct? You advices are appreciated. Thanks.

[Mr. Knowitall]

Survivor benefits are not means tested.

[Janke]

You are not factoring in the fact that the $4000 withheld was used to pay a debt that you owed so even though you didn't get it in your bank account, you did get the benefit of it.

To help wrap your mind about this, pretend that you did receive all $8000 in your bank and wrote monthly checks to repay the overpayment. Since your 2010 overpayment balance is $0.00 now, you would be overpaid $7080 for 2011.

When do you reach full retirement age? Perhaps you should be giving a better estimate of your earnings on your widower's benefit to prevent yet a third year of overpayment.

Although survivor benefits are not means tested per se, they are subject to the annual earnings test if the recipient is under full retirement age.