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Self-Employment and your Social Security Claim

You can receive disability benefits while working, however; your monthly income must be below the current allowable limit. This limit is referred to as SGA, Substantial Gainful Activity. In 2014, SGA is $1070 gross income per month. This is easy to monitory and calculate when working for an employer, but what if you are self-employed?

If you are self-employed, you will fall under different regulations. As a self-employed individual you may work 70 hours a week and make $100 or you may work 2 hours per week and make $1000. The income amount of a self-employed individual rarely reflects the amount of time put into the job. As a self-employed individual you wear many hats and hold extensive knowledge that the Administration will place a value on, regardless if you receive immediate income or not.

The Administration will determine if you are engaging in SGA by three tests. The tests are listed below.

  1. If you render services that are significant to the operations of your business and receive substantial income from the business you will be considered engaging in SGA.
    1. Services are considered to be significant if you are not a farm landlord and you operate your business entirely alone.
    2. If you do not operate alone, your services will be considered significant if you contribute more than half of your total time to management or if you work for than 45 hours a month rendering management services. This is regardless of the total management time that is required by the business.
    3. If you rent farm land to another, your servicers are significant if you materially participate in the production or management of the things raised on the rented farm.
    4. Substantial income is calculated after all deductions for expenses and the operations of your business is deducted and compared to current guidelines.
  2. If your work activity in terms of hours, skills, energy output, efficiency, duties, and responsibilities is comparable to that of an unimpaired individual in your community who are in the same or similar business as their means of livelihood, you will be considered engaging in SGA.
  3. If your work activity, even when not compared to an unimpaired individual, is clearly worth the SGA limit when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee to do the work you are doing, you will be considered engaging in SGA.

As a business owner, you know that all of the money coming into the businesses can leave just as quickly. This is due to the multiple kinds of expenses you incur on a monthly, quarterly or even yearly basis. When applying for disability, you should be prepared to disclose all of your income statements and tax information to the Administration. This will allow the Administration to determine the appropriate amount that should be allocated to you which will directly affect whether or not you are considered to be working over the SGA limit.

If you are self-employed and are applying or have already applied for disability benefits and want to learn more, please contact our office at 1-877-526-3457. You can also visit www.ssa.gov and read the code of federal regulations as they relate to self-employment.

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Jan Dils, Attorneys at Law

Jan Dils, Attorneys at Law
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