12 Types of Income That Don’t Count Against Your Social Security Benefits

While you can choose to start receiving your Social Security benefits as young as age 62, doing so isn't always a great idea financially. For one thing, your monthly check amount will be temporarily reduced based on how far you are from your full retirement age. For another, every dollar you earn over $23,400 for the year reduces your Social Security check further — at least, until you reach your FRA, after which point income and age don't impact your benefits.

However, it's important to note that the money from your reduced benefits isn't gone forever. Instead, it will be added to your monthly Social Security check once you reach your full retirement age. Plus, if you can't delay taking Social Security benefits before your full retirement age, certain types of income won't count toward the $23,400 limit, which gives you a little more leeway when calculating your reduced benefits amount.

Keep reading to learn which types of income won't cut into your benefits check if you're receiving Social Security before your full retirement age.

Whether self-employed or employed by another person or entity, only income earned from your job counts toward the $23,400 threshold. This means the money you earn in interest or dividends from investments in stocks, bonds, and savings accounts won't lower your Social Security benefits for the year if you haven't reached full retirement age.

If you're making ends meet by withdrawing money from your Individual Retirement Account (IRA), that money won't count toward the $23,400 income limit.

If you're receiving money from a pension or retirement benefit, that income doesn't count toward your earnings limit for Social Security benefits taken before your full retirement age.

Do you earn money by renting out a second property? If so, that income won't reduce your Social Security benefits. (Obviously, this doesn't apply if the money you earn from rental properties is part of your full-time job — for instance if you're a real estate broker.)

Money received from gifts or inheritances is not counted as income for Social Security purposes. Unlike most other sources of income on this list, you likely won't have to pay income taxes on the money you received as an inheritance or gift, though this depends on the amount you received and the state in which you reside.

Veterans Affairs (VA) benefits, such as disability or compensation, do not reduce Social Security benefits before your full retirement age.

If you earn royalties on something you created, copyrighted, or patented, those earnings aren't considered part of your income — but only during the year you turn your full retirement age.

Did you lose your job while receiving Social Security benefits but before reaching your full retirement age? If so, you might receive an unemployment check, and that income doesn't count toward your temporary Social Security benefits reduction.

However, receiving Social Security benefits could impact how your unemployment benefit is calculated. You'll want to talk to your state's unemployment office to find out whether receiving Social Security compromises your unemployment benefits.

Similarly, the money you earn from a workers' compensation insurance payout doesn't count as income to reduce your monthly Social Security benefit.

Some trust funds and annuity plans are exempt from federal income tax requirements. If the payments you receive from either of these two sources of income are exempt from income taxes, then they're likely exempt from contributing toward your $23,400 income limit as well.

If you won an award based on length of service or achievement in a specific field, that money doesn't count as income, which reduces your benefit. The same is true for any prize winnings from contests you enter as an individual (not a business).

As soon as you reach your full retirement age, the wages you earn from a job no longer count toward a reduction in benefits. You'll also start receiving higher benefits checks to make up for the delayed Social Security benefits while you were still working.

This change takes effect in the month of your birth, so even if you were born on the last day of the month, you don't have to wait until the next month for your increased benefit to take effect.

If possible, it pays — literally — to delay taking your Social Security benefits until at least your full retirement age. If you wait, you're free to earn extra income with a part-time job without experiencing a temporary benefits reduction, and your monthly check amount will be higher as a result.

However, everyone's circumstances are different. A financial advisor, such as a retirement planner, can help you decide whether taking Social Security benefits before your full retirement age is a good idea for your budget.