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Generally, college students aren’t exactly swimming in money, even if they have a job while attending school. Most would appreciate an opportunity to save money, even if it just means having less tax deducted from their paychecks. The Student Earned Income Exclusion (SEIE) allows them to do this.
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SEIE, administered by the Social Security Administration (SSA), is a work incentive that allows certain Supplemental Security Income (SSI) recipients to exclude earnings from their income to reduce their tax withholding. To be eligible, recipients must be under the age of 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 income that can be excluded. The current amount that can be excluded is $2,040 per month up to an annual maximum of $8,230. This compares to the 2021 exclusion of $1,930 per month to an annual maximum of $7,770.
The SSA generally adjusts the monthly amount and the annual limit each year, based on increases in the cost of living index. Soaring inflation numbers this year probably mean you can expect SEIE to climb even higher in 2023.
Before applying to SEIE, make sure you meet the SSA’s definition of “regular attendance at school.” To be eligible, you must meet one of the following criteria:
- Are at a college or university for at least eight hours per week under a semester or quarter system.
- Attend grades 7-12 for at least 12 hours per week.
- Are enrolled in pre-employment training of at least 12 hours per week (or 15 hours per week if the training includes workshop practice).
- You are home-schooled in grades 7-12 for at least 12 hours per week and in accordance with the home schooling law of the state or jurisdiction where you live.
Some of the time restrictions may be waived if a student cannot meet them for reasons beyond their control, such as illness.
The SEIE is applied to a student’s gross income before general and earned income exclusions, according to the South Dakota Department of Social Services. The SEIE annual maximum applies to the calendar year that begins in January and ends in December. You cannot split the amount of SEIE applied in a given month, which means that once you have reached the limit for a certain month, no exclusions can apply until the following month.
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If you receive SSI and start working, you should report your income to SSA by calling or visiting your local Social Security office and speaking with an SSI claims representative, according to the Human Development Institute of the United States. University of Kentucky. If you meet the conditions described above, ask the claims representative if you are eligible for SEIE.
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