Substantial Earnings Years of Credit

How does the substantial earnings years of credit work for Windfall Elimination Provision?

In this article I wanted to expand on a question that came in via the comments recently, because it addresses a theme I’ve seen often:

I have several years where I was just under the substantial earnings cutoff and 25 that are way over. Do you get partial credit for the years that did not reach the substantial floor?

Overview of Substantial Earnings

When your Social Security benefits are subject to the Windfall Elimination Provision (WEP), there is a way to reduce and possibly eliminate the effect of the WEP. This reduction is accomplished by way of the substantial earnings credit. Substantial earnings years of credit are earned when you have worked in a Social Security-covered job and you have earned at least the substantial earnings limit for that particular year.

The substantial earnings limit is set for each year (click the link to see the substantial earnings limits). This figure is specific to the year.

In order to begin reducing the WEP impact, you must have earned substantial earnings in 21 or more years. For each year earned, from 21-30 years, 10% of the WEP impact is eliminated. With 30 or more years of substantial earnings, WEP impact is completely eliminated.

It’s Black or White

However, if in any particular year you earned even one dollar less than the figure for the year in question, you do not earn the credit for that year. On the other hand, if you have earned more than the substantial earnings limit in any particular year, the excess earnings above the limit are not credited to another year – you can only earn one year of credit in any tax year. And you can’t combine years where you were under the limit to produce additional years of credit.

So in answer to the reader’s question, “just under the substantial earnings cutoff” doesn’t provide a partial credit. So, those several years where the reader was just under the limit produce no years of credit for him. Plus, even though he earned “way over” the limit in 25 other years, he has only earned 25 years of credits for those years.

My response to the question, with the above facts in mind, is as follows:

Unfortunately, no. It’s black or white, you either earned above the threshold or you didn’t. And there is no combining years, either.

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