One of the most frequently asked questions from our disability attorneys is whether a disability claimant can run a business and still qualify for Social Security Disability. The quick answer, if you have paid self-employment taxes (SECA) just like the regular taxes for the employed (FICA) over the years, then you are eligible for Social Security Disability Insurance. However, if you run a business that earns you a substantial amount of income and that could be considered as Substantial Gainful Activity (SGA) then you won't be eligible for the Social Security Disability Benefits.
How does SSA determine the SGA for your business?
For regular wage earners, the threshold amount cutoff for earnings considered as SGA is $1260 for non-blind and $3110 for blind claimants. However, for the self-employed, the SSA does not only consider the minimum wage amounts as discussed.
The Social Security Administration knows whether a small business's profit over $1260 could be considered a good indicator of whether, as a business owner, the earnings could qualify as substantial gainful activity. For instance, for self-employed people (small business owners not applying for SSDI for blind or low vision) the SSA will actually dig more into what could be considered as a substantial gainful activity using 'The Three Tests' or 'The Countable Income Test'.
The Countable Income Test
The three tests the SSA use determine whether your self-employment is substantial gainful activity (SGA). The first test the SSA uses is the 'Significant Services and Income Test', and if it is not enough to assess the disability then it is followed by the 'Comparability' and the 'Worth of Work' tests. If the SSA thinks that your self-employment is SGA, then you will be denied SSDI benefits.
Note that in case of an SSI, after you are approved and find yourself earning also through self-employment, then your SSI benefits would not be terminated. However, in case of SSDI if you are approved and then start to earn SGA after the start of benefits, then your benefits could be temporarily stopped or terminated if the SSA finds out about it.
So, as a business owner, income from your business activity would be considered as SGA if:
- -You provide only significant services to the business in exchange for a small amount of income (*Note: The SSA has special guidelines on describing what could be considered as significant or substantial);
- -The work you provide to the business is comparable to similar or same work provided by non-disabled people to the business;
- -You perform work that gains you upto $1260 per month in terms of its value to the business or how much it saves you from having to pay an employee to do the work;
After the SSA has carried out the 'Three Tests' in determining whether your business qualifies as SGA, the SSA will deduct any 'impairment-related work expenses' and any 'incurred business expenses' from your net earnings. The unincurred business expenses are expenses that you don't necessarily pay yourself – such as contributions made by others. For instance, you could get your office furniture expenditure through a friend's gift or get the necessary utility bills covered by a generous family member. Other things such as wheelchairs, conveyance etc may also be provided by charities or vocational organizations.
On another hand, impairment-related work expenses are costs that are covered by you to facilitate your business. For instance, a hearing aid, a pupil guided computer etc. Since the IRWEs are costs made by you for certain equipment or services needed for work, they are not counted as SGA. That is, the cost of these expenses will be subtracted from your net earnings before evaluation for SGA. After subtracting the subsidies and impairment-related costs from your net earnings the SSA will then compare your remaining net earnings to determine whether they qualify as SGA.
Lastly, if you have already been approved for benefits you can continue to receive upto $1260 in disability benefits per month without losing or termination of your benefits as long as you remain eligible under all other requirements for the disability benefits.
If you or a loved one has been already running a small business but are in sole need of applying for SSDI or SSI, or if you are someone who is receiving disability benefits but needs to set up a small business without losing the SSD Insurance, then you can get counsel of our professional disability attorneys for more guidance.