(a) Deductions, reductions, adjustment. Deductions because of earnings or work (see Secs. 404.415 and 404.417); failure to have a child ``in his or her care'' (see Sec. 404.421); as a penalty for failure to timely report noncovered work outside the United States, failure to report that he or she no longer has a child ``in his or her care,'' or failure to timely report earnings (see Secs. 404.451 and 404.453); because of unpaid maritime taxes (see Sec. 404.457); or nonpayments because of drug addiction and alcoholism to individuals other than an insured individual who are entitled to benefits on the insured individual's earnings record are made:
(1) Before making any reductions because of the maximum (see Sec. 404.403),
(2) Before applying the benefit rounding provisions (see Sec. 404.304(f)), and,
(3) Except for deductions imposed as a penalty (see Secs. 404.451 and 404.453), before making any adjustment necessary because an error has been made in the payment of benefits (see subpart F). However, for purposes of charging excess earnings for taxable years beginning after December 1960 or ending after June 1961, see paragraph (b) of this section and Sec. 404.437 for reductions that apply before such charging.
(b) Reductions, nonpayments. (1) Reduction because of the maximum (see Sec. 404.403) is made:
(1) Reduction because of the maximum (see Sec. 404.403) is made:
(i) Before reduction because of simultaneous entitlement to old-age or disability insurance benefits and to other benefits (see Sec. 404.407);
(ii) Before reduction in benefits for age (see Secs. 404.410 through 404.413);
(iii) Before adjustment necessary because an error has been made in the payment of benefits (see subpart F of this part);
(iv) Before reduction because of entitlement to certain public disability benefits provided under Federal, State, or local laws or plans (see Sec. 404.408);
(v) Before nonpayment of an individual's benefits because he is an alien living outside the United States for 6 months (see Sec. 404.460), or because of deportation (see Sec. 404.464);
(vi) Before the redetermination of the amount of benefit payable to an individual who has been convicted of certain offenses (see Sec. 404.465); and
(vii) Before suspension of benefits due to earnings (see Sec. 404.456), for benefits payable or paid for months after December 1995 to a non-working auxiliary or survivor who resides in a different household than the working auxiliary or survivor whose benefits are suspended.
(2) Reduction of benefits because of entitlement to certain public disability benefits (see Sec. 404.408) is made before deduction under section 203 of the Act relating to work (see Secs. 404.415, 404.417, 404.451, and 404.453) and failure to have care of a child (see Secs. 404.421 and 404.451).
(3) Reduction of the benefit of a spouse who is receiving a Government pension (see Sec. 404.408(a)) is made after the withholding of payments as listed in paragraph (d)(1) of this section and after reduction because of receipt of certain public disability benefits (paragraph (b)(2) of this section).
(c) Alien outside the United States; deportation nonpayment--deduction. If an individual is subject to nonpayment of a benefit for a month under Sec. 404.460 or Sec. 404.464, no deduction is made from his benefit for that month under Sec. 404.415, Sec. 404.417, or Sec. 404.421, and no deduction is made because of that individual's work from the benefit of any person entitled or deemed entitled to benefits under Sec. 404.420, on his earnings record, for that month.
(d) Order of priority--deductions and other withholding provisions. Deductions and other withholding provisions are applied in accordance with the following order of priority:
(1) Current nonpayments under Secs. 404.460, 404.464, 404.465, 404.467, and 404.469;
(2) Current reductions under Sec. 404.408;
(3) Current reductions under Sec. 404.408a;
(4) Current deductions under Secs. 404.417 and 404.421;
(5) Current withholding of benefits under Sec. 404.456;
(6) Unpaid maritime tax deductions (Sec. 404.457);
(7) Withholdings to recover overpayments (see subpart F of this part);
(8) Penalty deductions under Secs. 404.451 and 404.453. [40 FR 30813, July 23, 1975, as amended at 44 FR 29047, May 18, 1979; 48 FR 37016, Aug. 16, 1983; 48 FR 46148, Oct. 11, 1983; 56 FR 41789, Aug. 23, 1991; 60 FR 8146, Feb. 10, 1995; 68 FR 15659, Apr. 1, 2003; 68 FR 40122, July 7, 2003]