He Retired at 63 and Turned the Work Truck Into His Personal Pickup. Social Security Counted Income He Never Received.

A retired contractor with a heavy-duty pickup converted the vehicle from business use to personal use after turning 63. Social Security counted depreciation recapture in this change, creating taxable self-employment income even without selling the truck. The contractor did not receive additional payments, but the tax return still showed income from the truck's usage.

Social Security's earnings test applies before full retirement age, with a limit of $24,480 in 2026 before benefits are withheld. A first-year monthly earnings rule can protect post-retirement benefit checks if substantial services stopped during the year, regardless of annual tax return figures. The monthly earnings rule may allow retirees to receive full benefits even if their annual earnings exceed the limit.

Recapture can also increase the income used to determine whether Social Security benefits are federally taxable, as the IRS considers modified adjusted gross income plus half of Social Security benefits when applying these rules.