RS 02510: Annual Reports
TN 24 (05-98)
A. Introduction
Current year work reports refer to the estimates of earnings that are used to pay current year benefits. Estimates are made and used prior to the close of the tax year and are intended to help prevent overpayments. When a current year work report is received and processed timely, we are able to withhold benefits during the year and prevent overpayments from occurring. If an estimate of earnings is received late in the year, the beneficiary is notified of any "incorrect payments" that were made, and we withhold any current year benefits to recoup the incorrect payment(s).
B. Policy - Reporting
1. Who Should Report
(See RS 02510.001B.1.) A beneficiary should report his or her expected earnings when those earnings exceed the annual exempt amount and when changes in expected earnings would affect benefits payable.
2. What To Report
Beneficiary name, address, and Social Security number;
Estimated earnings for the current year;
Nonservice months, if monthly earnings test applies;
Any special payments, or earnings to be excluded;
Name and address of person making the report.
3. When to Report
a. Initial Claims Interview
The initial claims interview is very important for purposes of the earnings test. The interviewer should:
provide the beneficiary with an explanation of the purpose of the earnings test, the effect of earnings on benefits and his or her responsibilities for providing information to SSA to ensure correct and timely adjustment of benefits,
emphasize the importance of an accurate earnings estimate for the year. If the beneficiary is unsure, use the prior year's earnings as the estimate and tell the beneficiary to report any significant change in work or earnings levels,
explain that some types of payments are not countable for earnings test purposes. Explain special payment situations that occur, especially in the first year of retirement, e.g., accumulated sick and vacation pay that was earned in years prior to retirement, deferred compensation, severance pay.
input, to the MEF, any known special wage payments for years of entitlement and tell the beneficiary to contact SSA to report any special payments received in the future (up to full retirement age),
accurately code both the earnings estimate and any reported non-service months, to ensure correct payment of benefits.
tell the beneficiary that SSA will assume that work and earnings will continue at previous levels until the beneficiary provides information to the contrary, this means that SSA will update their earnings estimates, based on prior years earnings, unless the beneficiary reports a different estimate,
tell the beneficiary that SSA will use earnings reported to their record to adjust benefits under the earnings test. Emphasize that it is the beneficiary's responsibility to ensure that the earnings we use for purposes of the earnings test adjustment are correct.
b. Work Activity Changes
The beneficiary should report material changes in work activity. Interviewers should emphasize reporting responsibilities (including special payments received during the year which were earned in a prior period).
c. Mid-year and Monthly mailers
Beneficiaries who receive a request for an updated earnings estimate and a future year estimate should complete and return the form. (See RS 02510.010.)
d. Closed Year Report
Beneficiaries who earn over the exempt amount and receive some benefits during the year are required by law to file an annual report with SSA after the close of the tax year. Beginning with reporting year 1996 and each year thereafter, SSA will consider the W-2 filed by the employer and the SE tax return information to be the report required by law. SSA will use that information along with other pertinent information in our records to adjust benefits under the earnings test. Certain beneficiaries will be required to report their earnings to SSA so that the correct adjustment of benefits can be made. (See RS 02510.015)
4. How to Report
In writing, by telephone, or by visiting a field office. If the beneficiary reports in writing, he or she may use one of the following:
SSA-L9778-SM(SUP), SSA-L9779-SM(SUP), SSA-L9781; mid-year and monthly mailer.
Work report processed as part of the initial application process.
Returned checks received with an indication that the beneficiary is working.
Any written reports containing all the necessary information (RS 02510.005A.2.).
C. Procedure - Evaluating the Report
1. Incomplete Work Information
a. Monthly Test Does Not Apply
If the work report does not include an earnings estimate, contact the beneficiary for an estimate if payment status is current, suspended or deferred; input prior year's earnings as the estimate for the current year if available on DEQY or MBR (ARD line) if contact is unsuccessful within 10 days (30 days if direct mail contact is used).
b. Monthly Test Applies
If a work report is missing an earnings estimate or a start work month, contact the beneficiary to get the missing information. If contact is unsuccessful, follow RS 02510.005C.1.a. above for the current year estimate and input January (01) as the first service month.
2. Beneficiary Unsure of Earnings
If a beneficiary is unsure of his or her estimated earnings try to help determine a reasonable estimate using whatever information is available. Explain that the estimate can be revised at any time. If the beneficiary elects not to receive payment until after the close of the year, enter an estimate of "999999" and send a notice indicating that no payment is due because earnings are over the allowable amount.
3. Stop Work In A Future Month
Discourage a stop work report more than 4 months in advance.
If the stop work report is based on a mandatory retirement date or the beneficiary insists on reporting more than 4 months in advance:
Accept the report if the effective date is within 12 months of the current operating month (COM).
Ask the beneficiary to report any future change in work plans.
4. Start Work In A Future Month
Accept start work reports if the effective date is within 12 months of the COM. Do not encourage a start work report more than 4 months in advance.
Ask the beneficiary to report any future change in work plans.
5. Current Year Reports Received or Unprocessed After the Close of The Year
If an estimate is received for the closed year or a current year report made before the close of the operating year is not processed before the end of the year:
Do not process the estimate for the closed year.
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Notify the beneficiary that we were unable to process the estimate before the close of the year.
NOTE: The notice should explain that we will adjust his or her benefits based on the actual earnings for the year, when we know the amount. We will do this automatically when the earnings are posted to the earnings record. If preferred, he or she may contact SSA to file a report.
If the beneficiary contacts us to file a report, question the current year's work activity, and verify that the current year estimate, and or any non-service months (if applicable) are on the MBR. Input a current year estimate and NSM if applicable.
If the work report is a returned check, the field office should input the remittance into the Debt Management System (DMS) (use the RFOR screen — see MSOM DMS 003.006 ) and revise the work estimate.
6. Late Reports of Work
Late reports (reports received after work has resumed) of work are processed as any other current year report. However, accept any checks that are voluntarily returned.
NOTE: If the beneficiary desires to make a voluntary refund before the end of the year in order to avoid an overpayment at the end of the year, he or she may do so.
7. Special Payment
The term "special payment" refers to earnings that do not count under the earnings test, usually because they are attributable to services performed in a year prior to the year in which the payment is made (wage situations) or are attributable to services performed prior to the first month of entitlement to benefits (Net Earnings from Self-employment). See RS 02505.025 and RS 02505.125. If a special payment is involved the amount of the payment must be "posted" to the Master Earnings File (MEF) to ensure that the correct earnings for deduction purposes will be calculated by the Enforcement Program. See RS 02510.016 - RS 02510.021.
D. Procedure - Action Required
1. Original or Revised Estimate
If estimate shows earnings over the yearly limit but is not specific (e.g., not sure but more than "14500"), encourage a high estimate. (See RS 02501.105.) Accept any dollar amounts qualified by "under" or "approximately" as the estimate.
When an original or revised estimate is received the work notice is input and the Title II Redesign (T2RD) system will:
Make payment if payment is due for at least one full month of the current year.
NOTE: See RS 02501.110 if the beneficiary requests payment of any partial month benefit based on the estimate.Suspend benefits if full payment cannot be made for any month in the year.
NOTE: See SM 00605.001 ff. for input requirements for T2RD processing.
2. Notices
See NL 00601.040A for events requiring a notice.
3. Payment to Auxiliaries
Suspend auxiliary benefits whenever we suspend numberholder (NH) benefits for work activity; however,
Pay benefits to an entitled divorced spouse regardless of the NH's work in certain situations (RS 02501.021B.5.b.),
Pay auxiliaries if the NH has disappeared and there is reason to believe the NH is not working. (See GN 00304.025.)
4. Multiple Start and Stop, Intermittent Nonwork Months and Future Start Work Reports
Input multiple start and stop, intermittent nonwork months and future start work reports subject to the restrictions in SM 00605.005C.
5. Retention of Work Reports
Most work reports will be taken directly from the beneficiary and there will be no paper form to retain. Destroy any written work reports after input.
E. Policy - Work Suspension
1. Effect of Work Suspension on Payment in the Following Year
If suspension is due to work activity for December, suspense continues into January of the following year, unless:
we receive and process a work notice that allows full payment to be made for the following year, i.e., work deductions are not required, or
the beneficiary attains full retirement age in the current year, or
benefits are terminated during the year.
2. Benefits For Other Than Current Year
When work deductions are required, the law specifies that we make deductions from current year benefits beginning with the first month of entitlement in the year, and continuing until all "excess earnings" are withheld. When we receive a new estimate late in the current year or a revised estimate that requires additional withholding, any payments that were made earlier in the year are considered to be "incorrect payments". We are allowed to immediately withhold any current year benefits that are due in order to recoup any "incorrect payments" that were made. The beneficiary has no right to appeal this action. (The beneficiary may submit a new work notice if our action was incorrect). Incorrect payments may only be withheld from current year benefits.
At the end of the year, when we know how much the actual earnings were, we then make a determination of benefits payable. If the beneficiary was overpaid, he or she receives a notice of our determination and has a right to appeal the overpayment. If no appeal is made or if the appeal is unsuccessful, we can then withhold the overpayment for the prior year, from the current year benefits.
However, benefits due for other than the current year (e.g., an underpayment for a prior year) are used by T2RD to adjust incorrect payments for the current year, but may not be used in manually processing estimates.
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