A became entitled to old-age insurance benefits beginning with January 1959. He arranged with his employer to continue working at a salary of $100 a month, and he worked all 12 months in 1959. His total salary for 1959 was $1200; however, following a long standing practice, the employer gave A, as well as all other employees, a Christmas bonus of $50 and a package containing cigarettes. The claimant's "Withholding Tax Statement," Form W-2 showed total wages of $1250 indicating that the employer regarded the bonus payment as wages and social security taxes were paid on the full amount.
Under the provisions of section 203(e) of the Social Security Act, a beneficiary may earn as much as $1200 in a taxable year of 12 months and still receive his benefit payments for all months. If he is under age 72 and his earnings exceed $1200 for the taxable year, one full month's benefit is deducted for each $80 (or fraction of $80) in excess of $1200. However, no benefit will be deducted for any month in which the beneficiary neither rendered services for wages of $100 nor rendered substantial services as a self-employed person.
Section 203(e)(4) of the Social Security Act provides that an individual's earnings for a taxable year shall be the sum of his wages for services rendered in such year and his net earnings from self-employment for such year.
Section 209 of the Social Security Act defines "wages" means all remuneration for employment and that:
It was the policy of the employer to make these payments to each employee because of his employment relationship. The $50 payment appears to have been considered remuneration for employmnt, even though designated as a Christmas gift. The bonus payment, therefore, constitutes "wages" under the Social Security Act and is earnings for purposes of determining whether any monthly social security benefit is not payable.
It is, therefore, held that A's total earnings for 1959 are $1250 and a deduction equal to one month's benefit must be made from his monthly benefits for 1959.
 For 12-month taxable years ending after June 30, 1961, a deduction of $1 may be required from benefits for each $2 of earnings over $1,200 up to and including $1,700, and for each $1 of earnings over $1,700.
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