What Is the Student Earned Income Exclusion for SSI?
As a general rule, students are not exactly swimming in money, even if they hold jobs while also attending school. Most would welcome an opportunity to save money, even if it just means having fewer taxes deducted from their paychecks. The Student Earned Income Exclusion (SEIE) lets them do that.
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The SEIE, administered by the Social Security Administration (SSA), is a work incentive that lets certain Supplemental Security Income (SSI) recipients exclude earnings from their income to lower their tax withholding. To be eligible, recipients must be under age 22 and regularly attend school, according to the SSA.
In 2022, eligible students will be able to keep even more of their paychecks thanks to an increase in the amount of earnings that can be excluded. The current amount that can be excluded is $2,040 a month up to a yearly maximum of $8,230. That compares to the 2021 exclusion of $1,930 monthly up to a yearly maximum of $7,770.
The SSA typically adjusts the monthly amount and annual limit every year, based on increases in the cost-of-living index. This year’s surging inflation numbers likely mean you can expect the SEIE to climb even higher in 2023.
Before applying for the SEIE, make sure you meet the SSA’s definition of “regularly attending school.” To be eligible, you must meet one of the following criteria:
- Are in a college or university for at least eight hours a week under a semester or quarter system.
- Attend grades 7-12 for at least 12 hours a week.
- Are enrolled in a training course to prepare for employment for at least 12 hours a week (or 15 hours a week if the course involves shop practice).
- Are being home schooled in grades 7-12 for at least 12 hours a week and in accordance with the home school law of the state or jurisdiction where you live.
Some of the time restrictions might be waived if a student can’t meet them due to reasons beyond their control, such as illness.
The SEIE is applied to a student’s gross earnings before the general and earned income exclusions, according to the South Dakota Department of Human Services. The annual SEIE maximum applies to the calendar year that begins in January and ends in December. You can’t apportion the amount of the SEIE applied in a given month, meaning that once you hit a certain month’s limit, no exclusions can apply until the next month.
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If you receive SSI and start working, you must report your earnings to the SSA by calling or visiting your local Social Security office and talking to an SSI claims representative, according to the University of Kentucky Human Development Institute. If you meet the qualifications described above, ask the claims representative if you are eligible for the SEIE.
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