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The Student Earned Income Exclusion: Appealing to Working Youth

There can be little dispute that the Student Earned Income Exclusion (SEIE) is one of the more generous work incentives devised by the Social Security Administration. As is the nature of all good deals, it’s only actually available to a relatively small percentage of the population, and only if they meet certain requirements. Here we’ll look into who the lucky few are, the details of the deal they can get, and how they can go about getting it.

Most crucially, the SEIE is available only to SSI recipients. Those SSI beneficiaries have to be under the age of 22, regularly attending school or college or training to prepare for a paying job, and, as it is a work incentive, they do have to be working too. There is a little leeway in what qualifies as ‘regularly attending school’ but, essentially, to qualify someone has to be in college or university for at least 8 hours a week under a semester or quarter system; or in grade 7-12 for at least 12 hours a week; or someone can be in a training program for at least 15 hours a week if the course involves shop practice. That requirement drops to 12 hours if there’s no shop practice involved.

SEIE works by allowing those qualified beneficiaries to exclude up to $1,820 of their gross income each month, and up to $7,350 in the year. For example, if a young student earned $1,470 in a month Social Security would not count a single penny of it when calculating her SSI amount. That means that if she was receiving the full SSI amount of $750 before she was working she’d still have all that $750 and the $1,470 to give her a healthy month’s income of $2,220. Of course, the annual $7,350 cap does mean that she can’t have all her earned income excluded all year, but she can keep all her SSI for 5 months (1470 x 5= 7350) and she can do it all again next year (as long as she still qualifies). If someone else were earning $610 a month he’d be able to work all year and not lose any of his SSI (his annual earned income would be $7,320), but then again he wouldn’t have as much money overall as our high earner.

Another lovely, and rather rare, advantage of the SEIE is that there’s relatively little paperwork needed when applying to use it. A student need only show Social Security a student ID card, tuition receipt or anything else that would record clearly that she really is a current student. When summer’s on its way and school is getting ready to let out our working student just needs to let Social Security know that she intends to resume her studies once the new semester starts. Remarkably enough, there’s not a single form to complete: the SEIE is not only generous but it’s kind!