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.