-K.J., Vermilion, Ohio

A. You’re confused only because the rules are confusing. Here’s the deal:

The previous column you mentioned focused solely on the following issue, which was raised by another MoneyLine reader: If you’re 62, drawing Social Security benefits and continue working, you must forfeit some of your Social Security benefits if your income exceeds a certain dollar amount ($11,520 for 2003).

Does income from a pension count toward this dollar amount? No, said Kurt Czarnowski, regional communications director for the Social Security Administration. The agency counts only the money you earn from a job (generally wages and net income from self-employment), he said.

There’s a separate issue (to which you allude in your question in today’s MoneyLine): If you’re receiving Social Security benefits, a portion of those benefits may be subject to federal income tax.

To find out, you generally add up all your income (including pension, interest, dividend, and tax-exempt income income), plus one-half of your Social Security benefits, said Mark Higgins, professor of accounting at the University of Rhode Island in Kingston.

If the total exceeds a certain amount ($25,000 if you’re single, $32,000 if you’re married), up to 50 percent of your Social Security benefits will be taxed. If the total is higher (at least $34,000 if you’re single, $44,000 if you’re married), up to 85 percent of your Social Security benefits will be taxed.

Robert J. Sclama, former head of the federal and state tax committee for the Rhode Island Society of Certified Public Accountants, said many Social Security beneficiaries get these two issues mixed up.

“They confuse it, and I understand why they do,” said Sclama, who also runs his own financial-planning and tax-consulting practice in North Providence.

The problem is that these are two separate issues, each with their own sets of rules, he said.

TODAY’S TIP: Having a high “credit score” may qualify you for lower interest rates when you borrow. What is a credit score and how is it calculated?

Myvesta, a nonprofit financial management organization, has published a booklet, “Credit Scoring: How it Works and How You Can Improve Your Score.”

To order a copy, mail a check or money order for $5 to: Credit Scoring Publication, Myvesta, P.O. Box 8587, Gaithersburg, MD 20898. Or download a free copy from the group’s Web site: http://myvesta.org.

Neil Downing is a Journal staff writer and author of ” The New IRAs and How to Make Them Work for You.”