Michael Jordan’s Game-Worn Jersey Sold for $14 Million. A Collector Could Cash In Without Triggering Social Security’s Earnings Test
A six-figure sale of a prized collectible can land in a retiree's pocket without touching Social Security checks, but accepting a modest job offer might trigger an immediate benefit cut. The distinction comes down to a single word the agency…
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Michael Jordan’s game-worn jersey from Game 2 of the 1998 NBA Finals sold privately for a cool $14 million, Hunt Auctions announced October 12. The sale set a new high for basketball memorabilia and raises a practical question for retirees holding jerseys, coins or art that has quietly gained value for decades.
Picture a hypothetical collector. He’s 64, already receiving Social Security and ready to sell a valued piece of sports memorabilia. A former colleague has also offered him a paid job. He worries the sale alone will shrink his Social Security checks. The real threat to those monthly payments is the income from his new job.
A Six-Figure Gain Can Sail Past the Earnings Test
Social Security’s earnings test applies to people who start benefits before full retirement age (FRA), which is 67 for anyone born in 1960 or later. At 64, our collector falls directly under it. The annual earnings limit is $24,480 in 2026 and rises to $25,560 in 2027. Social Security withholds $1 in benefits for every $2 earned above the applicable limit.
The term that matters is “earn.” The agency counts wages from a job and net earnings from self-employment. Its own guidance says the earnings test leaves out pensions, annuities, investment income, interest and capital gains. Selling a jersey he bought years ago as an investment creates a capital gain, so the test ignores it whether the profit is modest or large.
When Collecting Turns Into a Business, the Math Flips
That protection depends on how he holds the item. Someone who regularly buys and sells memorabilia as a business, with a booth at card shows or a steady online storefront, may have net self-employment earnings. Federal tax law defines these as gross income from a trade or business, minus the deductions tied to that business, and Social Security counts them toward the limit just as it counts a paycheck.
A one-time sale of a piece he has held for years looks like an investment. A rotating inventory looks like a business. Most casual collectors land on the investment side, but how often you sell and why you bought will decide the question.
The job offer leaves no such gray area. Wages count toward the limit in full, however the jersey sale is treated.
A $100,000 Gain Versus a $35,560 Paycheck
Say our collector sells his memorabilia for a $100,000 gain and earns $35,560 from his new job in 2027. Put each through the earnings test separately.
The sale triggers no withholding because Social Security doesn’t count the capital gain as work earnings.
His wages are another story. They exceed the 2027 limit by $10,000, triggering $5,000 in benefits withheld under the $1-for-$2 formula. The much smaller paycheck causes all the disruption.
Withholding doesn’t mean the money is simply lost. Once he reaches 67, Social Security recalculates his benefit to account for months when payments were reduced or withheld. That raises his future monthly checks, although how much he ultimately recovers depends on how long he collects benefits.
Skipping the Earnings Test Still Leaves an IRS Bill
The earnings test and the tax code follow separate rules. A jersey sold from a personal collection can produce a taxable capital gain. Certain collectibles held longer than a year face a maximum 28% federal tax rate, but sports jerseys aren’t specifically named in that rule. He should confirm how his memorabilia is classified before estimating the tax.
A big gain also raises the income figure the IRS uses to determine the taxable share of Social Security benefits. IRS Publication 915, which covers how benefits are taxed, caps that taxable portion at 85%. It represents the portion of his benefits added to taxable income. His actual tax on it depends on his bracket, so a strong sale year can make his benefits more expensive to receive.
Treat the Sale and the Job as Two Separate Decisions
Selling the collectible is mostly a tax decision. Before he agrees to a sale, he should estimate federal tax on the gain, set that cash aside and think about making an estimated payment. A gain that size can bring a surprise bill in April.
The job is a Social Security decision. If he takes it, he should give Social Security an estimate of his wages up front so it can adjust his payments during the year. Otherwise he could face an overpayment notice later. He should also decide whether the paycheck is worth having part of his benefits delayed until he reaches 67 (easing back into work in retirement comes with its own set of tax traps, which we walked through in a free semi-retirement guide here: Retire Twice).
No two collectors are in quite the same spot. How long the piece was held and whether a hobby has turned into a business can change which rules apply, so pin those facts down before agreeing to sell.
Contact [email protected] for any questions or corrections.
Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
