Self-employment is becoming increasingly common, but nontraditional work arrangements can complicate the process of receiving Social Security Disability (SSD) benefits. If you are self-employed and no longer able to work, your earnings and work activities will need to be carefully documented in your application for benefits. 
Self-Employment and SSD Benefits
Self-employment includes owning and operating your own business, as well as working as a freelancer, independent contractor, or subcontractor for another business. Those who are self-employed pay a self-employment tax, which is the portion of Social Security and Medicare taxes that are normally paid by workers’ employers. They receive no paid time off, health insurance, or other employee benefits unless they make arrangements to provide for these things on their own.
In most cases, people who are self-employed can receive SSD benefits if they meet eligibility criteria. As with any other applicant, you must prove you have a disability that qualifies you for SSD benefits. This is a physical or mental impairment expected to last one year or more.
Another important piece of criteria used to evaluate applications is the inability to engage in substantial gainful activity. The Social Security Administration (SSA) recognizes that net profits for self-employed people don’t always accurately reflect their work. Your application will be evaluated based on the value of your work compared to the work of others performing similar activities, the savings you generate from not having to pay another person to do the work, or the income you bring into the business. Unincurred business expenses (unpaid contributions by others) are deducted from your earnings, as well.
The definition of substantial gainful activity changes on a yearly basis. In 2019, for example, substantial gainful activity was defined as earning $1,220 per month or $2,040 per month if you are legally blind.
Other Factors Considered Regarding Self Employment And SSDI
Previous Tax Payments
To be eligible for SSD benefits, you must have paid into the system. Employees have their Social Security taxes automatically taken out of their paycheck, but self-employed people only make payments by filing a tax return. If you haven’t been paying into the system, you won’t qualify for benefits.
Accurate Reporting of Income
Your SSD benefits are based on your prior earnings. If you underreported your income, regardless of whether the error was accidental or deliberate, you will receive lower than expected benefits.
Length and Duration of Employment
SSD benefits have requirements for both length and duration of work based on your age. You can use a combination of employee work and self-employment activity to qualify, however.
Continuing Self-Employment While Receiving SSD Benefits
If you are approved for SSD benefits, you may continue your self-employment activities as long as your work does not qualify as substantial gainful activity.
The value of any unpaid help given from your spouse, children, or other people; disability-related work expenses; and unincurred business expenses paid by someone else or by an agency will be deducted from your countable self-employment income. However, since you will also be evaluated based on the worth of your work to the business and whether your work activity is comparable to that performed by a nondisabled person, it’s not always easy to determine if your continued self-employment will be considered substantial gainful activity. It’s recommended that you consult an attorney about the potential implications of continuing self-employment while receiving SSD benefits.
Applying for SSI Benefits
If you do not qualify for SSD benefits, you may still be able to receive Supplemental Security Income (SSI) payments. This program defines disability in the same way but does not have any past work requirements.
Note that you must have limited income and assets to qualify for SSI benefits. If you are married and have a spouse who is working, a portion of his or her income will be “deemed” available to you. Depending on your spouse’s earnings, this could lower or eliminate your SSI benefits.
Have You Or A Loved One Been Denied Social Security Disability Benefits?
The process of applying for disability benefits is complicated under the best of circumstances, but self-employment requires additional documentation to establish work activities and income. To increase your odds of being approved for benefits in a timely fashion, it’s best to seek the assistance of an attorney with experience handling claims for disability benefits.
If you or a loved on has been denied Social Security Disability Benefits you need to speak with an experienced SSD attorney as soon as possible. Please contact us online or call our Virginia Beach office directly at 757.490.3500 to schedule your free consultation. We have offices throughout Virginia including Chesapeake, Newport News, Norfolk and Suffolk.
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