Q: I am turning 62 and planned to apply for my Social Security. But I am confused about the earnings penalty rules. I have several streams of investment income and I dabble in a couple businesses that make me a few pennies every year. Please tell me: What is income and what isn't?

A: The Social Security Administration's "program operations manual system," the "bible" SSA employees use to sort through all of Social Security's complex rules and regulations, has several chapters, running into the hundreds of pages, to describe what counts as income and what doesn't for the earnings penalty provisions of Social Security law.

So obviously, the information I give you in this short column space just scratches the surface of a thorough answer.

And before I scratch that surface, here's a bit of background for confused readers who are not sure what we mean by an "earnings penalty."

If you are 66 or older, the law doesn't care about your income. You could be working full time and making $1 million a day and you'd get your Social Security checks.

But if you're under your full retirement age, the law says you'll get all your Social Security retirement benefits only if you keep your earnings under $13,560 per year. And if you exceed the limit, $1 is withheld from your Social Security checks for each $2 you make over that amount.

As a general rule, investment income does NOT count towards the earnings limit. But income from work does — whether that income is in the form of wages or if it's in the form of self-employment earnings from a business.

But here is where things get a little tricky because there are all kinds of "ifs, ands, or buts" associated with business income. It is very easy for people involved in businesses, especially family corporations, to manipulate their income. In other words, you could be heavily involved in managing and running a business, but on the books, you pay yourself a very small salary (sometimes just to stay under the $13,560 Social Security limit). And that's illegal

On the other hand, you might be doing little if any work for a business, but yet you derive a significant amount of income from it. SSA might be able to disregard that income if you are not really involved in the business venture.

The only way you will know for sure if the income you have from your investments and businesses counts toward the earnings limits is to go over the facts of your case with an SSA representative. But I can give you a little clue. Look at the Schedule SE on your last tax return. Whatever income you reported on that form is usually the income SSA counts toward the earnings limits.

Q: I recently filed for my Social Security retirement benefits. After I filled out all the papers and submitted my birth certificate and tax returns, I thought we were done. But I just got a form in the mail that's asking me dozens of questions about an appliance store my wife and I own. Why is SSA interested in this? As I told them during the interview, the store and all its income is in my wife's name.

A: They're interested because of the reasons discussed in the last answer. If you're still involved in the business, whether you're selling washers and dryers, or helping install them, or even if you're just sweeping the floors and cleaning the bathrooms at the store, some of the income from the business rightfully belongs to you. SSA uses those forms to decide how much, if any, income must be assigned to you. And if it exceeds the Social Security income limits, you may not be due any monthly retirement benefits.

To find out more about Tom Margenau and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.