From 24/7 Wall St. · Gerelyn Terzo · · 1m 10s
Christmas Trees and Social Security Rules
A 63-year-old tree grower’s extra season can shift Social Security earnings counts.
In brief
A 63-year-old tree grower’s extra season can shift Social Security earnings counts. A 63-year-old Christmas tree grower’s seventh growing season may exclude timber gains from Social Security’s earnings test. Originally reported by 24/7 Wall St..
Christmas Tree Acreage Decline
U.S. Christmas tree acreage fell 35% from 2002 to 2022, dropping from 450,000 to 293,000 acres.
Social Security Earnings Test
Social Security withholds $1 in benefits for every $2 above $24,480 earned before retirement age.
Tree Age and Tax Rules
Trees cut after six years qualify as timber under federal tax rules, changing Social Security earnings counts.
Section 631(a) Election
Growers can elect Section 631(a) treatment to separate timber gain from ordinary farm income.
Tax Basis Matters
The gain on cutting is based on the difference between timber's adjusted basis and fair market value.
Medicare Premiums
Medicare may look back two tax years when determining income-related premiums for older growers.
Critical Timing
The election must be made before harvest and cannot be reversed after trees are cut.
What Changes Next
A 63-year-old grower’s seventh growing season may exclude timber gains from Social Security’s earnings test.
The bottom line
A 63-year-old Christmas tree grower’s seventh growing season may exclude timber gains from Social Security’s earnings test.
