Earned income can be wages paid in cash or in kind. Social Security may count more of a person’s earned income than the person actually receives. For example, earnings are counted when they are being withheld because of a garnishment or to pay a debt or other legal obligation or to make any other payments.

Earned income can be:

  • Gross wages paid in cash (before any deductions), wages paid in cash to uniformed service members, and wages paid in kind
  • Net earnings from self-employment
  • Refunds of Federal income taxes and advance payments by employers made in accordance with the earnings income credit provisions of the Internal Revenue Code
  • Payments for services performed in a sheltered workshop or work activities center
  • Certain royalties and honoraria

Bonuses based on work performance also are considered earned income, as are sick pay and temporary disability payments received within the first six months of stopping work. For the regulatory definition of earned income, visit
http://www.socialsecurity.gov/OP_Home/cfr20/416/416-1110.htm.