In the world of Social Security benefits, understanding the regulations and requirements for deductions due to noncovered remunerative activity outside the United States can be a daunting task.
This article aims to simplify and explain the 45-hour and 7-day work tests as they relate to these deductions.
Section 1: Deductions Because of Individual’s Activity
1.1 Prior to May 1983: The 7-day Work Test
Before May 1983, a 7-day work test was in place to determine whether benefit deductions should be made for noncovered remunerative activity outside the US. If a beneficiary engaged in such activity on 7 or more different calendar days within a month, a deduction equal to their monthly benefit would be made. This applied to beneficiaries under age 72 (or age 70 after December 1982) and excluded disability insurance benefits and child’s or widow(er)’s insurance benefits based on disability.
1.2 From May 1983 Onwards: The 45-hour Work Test
Starting in May 1983, the 7-day work test was replaced with a 45-hour work test. Benefit deductions would only be made if a beneficiary worked for more than 45 hours in a month, while engaging in non-covered remunerative activity outside the United States.
Section 2: Deductions from Benefits Due to Earnings or Work of an Insured Individual
2.1 Prior to September 1984: The 7-day Work Test
Similar to the individual’s activity deductions, a 7-day work test was also in place for deductions from benefits due to the earnings or work of an insured individual. If an insured individual worked on 7 or more days in a month, a deduction would be made from the benefits payable on their earnings record.
2.2 From September 1984 Onwards: The 45-hour Work Test
In September 1984, the 7-day work test was replaced with the 45-hour work test for insured individuals under age 70. Benefit deductions would only be made if the insured individual worked more than 45 hours in a month.
2.3 Amount of Deduction
The amount of the deduction required by this regulation is equal to the wife’s, husband’s, or child’s benefit.
2.4 From January 1985 Onwards: Exclusion for Divorced Spouses
Starting in January 1985, no deductions would be made from the benefits payable to a divorced wife or a divorced husband who had been divorced from the insured individual for at least two years.
Example: John’s Social Security Benefit Deductions
John, a U.S. citizen, was receiving Social Security benefits and decided to move to France in June 1982. While living in France, John started working part-time at a local bakery, a noncovered remunerative activity outside the United States. Here’s how the deductions for John’s Social Security benefits would have been applied based on the 7-day and 45-hour work tests:
Scenario 1: July 1982 (Prior to May 1983, 7-day Work Test) In July 1982, John worked at the bakery on 8 different calendar days, exceeding the 7-day work test. As a result, a deduction equal to his monthly benefit would have been made for that month.
Scenario 2: June 1983 (From May 1983 Onwards, 45-hour Work Test) In June 1983, John continued to work part-time at the bakery, but only worked a total of 35 hours during the month. Since he did not exceed the 45-hour work test threshold, no deductions would have been made from his Social Security benefits for that month.
Scenario 3: October 1983 (From May 1983 Onwards, 45-hour Work Test) In October 1983, John increased his working hours at the bakery, working a total of 50 hours during the month. Since he exceeded the 45-hour work test threshold, a deduction equal to his monthly benefit would have been made for that month.
These scenarios illustrate how the 7-day and 45-hour work tests were applied to John’s Social Security benefits based on his noncovered remunerative activity outside the United States in different time periods.
Conclusion: Understanding the regulations surrounding deductions for noncovered remunerative activity outside the United States can help beneficiaries and insured individuals navigate the complex world of Social Security benefits. This guide aims to clarify the 45-hour and 7-day work tests and provide a comprehensive overview of the deductions applicable in various time periods.
https://www.ssa.gov/OP_Home/cfr20/404/404-0417.htm
At Hugo Fierro & Michael Perez, we have the necessary expertise to provide guidance on comprehending the intricate nuances of your Social Security disability claim.