This, from the SS web site, might help to answer your query.
Note the repeated use of the word "wages", as well as the
exempted items.

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Bob Oaks wrote:

- quote -

[snip]

Hold the presses. I did not know that you were no longer
working for this firm in 2004. Now I completely understand
that you will receive a W-2 that is going to include as
taxable compensation the value of the health insurance being
provided for your domestic partner. Social Security should
not count that amount against the $11,640 limit as it does
not represent compensation for work you are performing in
2004.

--
Alan
http://taxtopics.net

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"A.G. Kalman" <agk202[at]netscape.net> wrote:
- quote -

Yes, the benefit was paid throughout the year, but I was not
an employee since I am retired. This is the only item on
the statement of earnings (and presumably on the W2 when I
get one). I finally got an answer back from Social
Security, and though it is a bit vague (suprise?) I think
that this falls under the category of what they call
"Special Wage Payments", which do not reduce the Social
Security benefits, because they are in effect "compensation
for work done before I retired" (I think!).

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A.G. Kalman <agk202[at]netscape.net> wrote:

- quote -

I'm simply going by what I read in an SSA publication. It
seemed to indicate that an amount is not considered "earned"
for social security benefit limitation purposes (not to be
confused with income tax purposes, or any other purpose)
unless work was actually performed during the year. As I
understand the factual situation in question, the
entitlement to this benefit was earned based on work perform
in PRIOR years, since the poster is no longer currently
employed (if I understand the facts correctly).

But, I honestly don't know the answer, and therefore
recommend "communication" with the SSA. <g
MTW

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"Michael T Wing CPA" <mtwingcpa[at]yahoo.com> wrote:

- quote -

Thanks, I agree I need to ask SSA. I sent them an email
several days ago, but only silence since them. I think you
understand the distinction I am trying to make between
"taxable" income that will reduce SSA benefits and "taxable"
income that will not reduce SS benefits. Interest and
dividends are taxable, but they do not reduce benefits, for
example. Royalties from a book I just wrote could reduce
benefits, though unless Oprah calls, I'm pretty well covered
there. But the "imputed" income, especially if it's
considered "deferred" seems to be a gray area.

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Michael T Wing CPA wrote:
- quote -

I believe a taxable employer sponsored benefit for the year
is considered wages for that year, It would not be deferred
compensation just because the amount first surfaced on the
W-2. The benefit was "paid" throughout the year.

--
Alan
http://taxtopics.net

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Bob Oaks wrote:
- quote -

They have to provide to you a W-2. CA law differs from
federal law regarding medical insurance for a domestic
partner who is not a dependent. Federal law will treat the
insurance as taxable compensation as it only allows an
exclusion for employer provided health benefits for the
taxpayer, spouse and dependents. CA law allows the
exclusion when a domestic partner is covered even if the
partner is not a dependent. This probably explains the
convoluted statement. The amount of the benefit would be
included in Box 1 and Box 5 of the W-2.

There is also another aspect to this gross income exclusion.
As far as I know, CA employers are treating the payments as
taxable federal compensation (Box 1 of the W-2) even if the
partner is the dependent of the employee. Effectively, this
means that the employee will have a W-2 that overstates
gross income for federal purposes. If anyone reading this
has experience with CA taxpayers who filed 2002 tax returns
excluding the amount from Line 7 (a W-2 mismatch) please
post any information if the taxpayer has heard from the IRS.

--
Alan
http://taxtopics.net

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Bob Oaks <bobinsfoNOSPAM[at]yahoo.com> wrote:

- quote -

My understanding is that wages are only considered to be
"earned" for benefit limitation purposes if paid in the year
that work was actually performed. If payment is received in
a later year, it is treated as "deferred" compensation and
does NOT reduce your benefits. (Note, however, that to the
extent the deferred pay is taxable, it might nevertheless
cause a portion of your social security benefits to be
taxed. That's a separate issue.)

However, I suspect that you will need to "interface" with
the SSA in order to make sure they understand the situation.
Otherwise, they (or their computer) will likely ~assume~
that anything reported on a W-2 constitutes "earned" income.

MTW

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"Harlan Lunsford" <lunstax[at]bellsouth.net> wrote:
- quote -

Well the employer (Bank of America) did not give me a real
W-2. It's simply a Statement of Earnings and Deductions for
the value of HIS insurance (if we could marry after a
quarter of a century together, I assume this would be a moot
question). Most of it is "Imputed Medical and Dental"
($3666); the rest is "Miscellaneous Pay" ($303). The
Miscellaneous Pay is equal to the amount withheld for FICA
and OASDI. Then in the summary section (there is no Box 5)
the total of $3691 is shown as Fed Wages, FICA, OASCI, CA
Wages, and CA OASDI. I assume that under new California
Domestic Partner legislation it won't be considered taxable
by the state, and for the IRS I have enough offsetting
deductions, but the only concern is whether it will reduce
my Social Security benefits. Is this really considered
"earned income"? I didn't work during this year. Or does
it fall in the same category as dividends and interest,
which as I understand it does NOT affect Social Security
benefits?

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Bob Oaks wrote:

- quote -

If the employer furnishes a W-2 next year for the value of
her insurance, then yes, it is earned income.

Cheer$,
Harlan Lunsford, EA n LA

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Bob Oaks wrote:

- quote -

SSA will use wages you receive. Wages do include the value
of benefits. I believe the SSA will use the amount in Box 5
of your W-2. The limit in 2004 is $11,640.

--
Alan
http://taxtopics.net

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I guess this is a question for this forum. I am about to
start collecting Social Security (at age 62). I know that
my benefits will be reduced if I earn more than a certain
amount each year ($11,600, I think in 2004). However, I'm
not sure what is included in "earnings". My former employer
offers me health insurance and allows me to carry my
domestic partner on that insurance. I just received an
earnings statement for 2003 that shows nearly $4000 in
"imputed income" because of my partner's insurance. Is this
"inputed income" considered income for social security
purposes? In other words, will it be counted as part of the
$11,600 that will lead to a reduction in benefits?

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