Disability Benefits for Self-Employed Individuals

December 12, 2017
Dayes Law Firm

Self-employed people are eligible for Social Security Disability Insurance just the same as workers who work for employers. However, the process through which their income and work activities are evaluated is slightly different than those in a traditional employment role.

The Dayes Law Firm PC team has helped countless individuals apply and receive disability benefits. Our experienced Phoenix Social Security Disability lawyers are familiar with all aspects of Social Security law and can help you with your claim.

Evaluating Substantial Gainful Employment

In addition to meeting the medical criteria to be approved for Social Security Disability benefits, claimants must also show that they are not performing substantial gainful activity (SGA).

For wage earners, this determination is easier. A person is determined to be performing SGA if his or her countable income is $1,170 or more a month or $1,950 for a blind person in 2017.

The SGA evaluation is more difficult for self-employed individuals. The SSA evaluates your activities and the value they provide to your business. It analyzes this by applying three tests if you are applying for benefits or have not received benefits for at least two years. If you do not meet the first test, the SSA will evaluate your claim based on the remaining tests.

1. Significant Services and Substantial Income

The first test determines if the claimant has provided services to the business that are significant to the business and if the claimant has received a substantial income from the business. If you have provided significant services or your income is substantial, you will be found to be performing SGA and will not be eligible for benefits.

SSA defines significant services as contributing more than half of the time required to manage the business if the business involves more than one person or if the impaired individual provides management services for more than 45 hours a month. If you rent your land to someone and help manage the production of things raised on the land or materially participate in their raising, you will be considered to be providing significant services to the business.

The SSA defines substantial income as having an average income more than the SGA limit, earning an amount similar to what you earned before becoming disabled or earning an amount similar to what a person in your community who is self-employed in the same type of business as you who does not have an impairment would get paid.

The SSA deducts certain expenses from your business revenue to arrive at your countable income, such as:

  • Unpaid Help – The SSA deducts the value of unpaid help to the business provided by your spouse, children or others.
  • Impairment-Related Work Expenses – The SSA deducts expenses such as specialized transportation, training to learn how to use specialized equipment for your impairment and the cost of a person to perform the functions of your job you can no longer complete because of your impairment.
  • Unincurred Business Expenses Paid by Others – This includes an expense that a sponsoring agency or person may pay on your behalf such as rent, equipment, utilities or materials for your business.
  • Soil Bank Payments – These are deducted if they were included as farm income

2. How Your Work Compares to Others Without a Disability

The SSA determines whether you are engaging in SGA based on your work activity. It considers such factors as your:

  • Hours
  • Efficiency
  • Skills
  • Energy
  • Duties
  • Job responsibilities

If these factors are comparable to those of individuals in your community in the same business who do not have an impairment, you will be found to be performing SGA.

3. The Value of What You Do for Your Business

If your work is worth the SGA minimum or more to the business or what the manager would pay an employee to perform the work, you will not be eligible for benefits.

If You Work While Receiving Benefits

If you have received benefits for the last two years and engage in work activities, the SSA uses the Countable Income Test to determine if you are performing SGA. Your countable income is computed under Test One as described above. If your countable income is less than the SGA limit, you will continue to be eligible for benefits regardless of how many hours you are working.

However, if your countable income exceeds the SGA limit, your benefits will stop unless you can prove that you are not providing significant services to the business during that month.

Trial Work Period

The SSA also allows self-employed individuals and other beneficiaries to take advantage of a trial work period. This allows a person to try to work for nine months while he or she still receives benefits without losing them.

Contact a Social Security Disability Lawyer

Rules regarding the calculation of income for self-employed claimants can be complex, requiring the assistance of an experienced Social Security Disability lawyer. Our knowledgeable attorneys can discuss your situation during a free consultation and point to the test that the SSA may use for these calculations. If an adverse decision is made on your claim, we can help with the appeal process.

Contact Dayes Law Firm PC today to schedule a free, no obligation consultation. We will not charge for our services unless you receive benefits.

Call 1-800-503-2000 or complete a Free Case Evaluation form.