Self-Employment and Earnings

Can you be self-employed while applying for disability? Yes, but to be found disabled, you must be unable to perform substantial gainful activity (SGA) due to a medically determinable impairment that has lasted or is expected to last for at least 12 months or longer, or result in death.

For wage earners, the Social Security Administration (SSA) assigns a dollar amount to what they consider to be SGA. In 2015, the SSA will find that you are able to perform SGA as a wage earner if your gross earnings are more than $1,090 per month.

If you are self-employed, then the SSA has three tests used to determine if you are performing SGA. The first test is the “Significant Services and Substantial Income Test.” If this test doesn’t show you are doing SGA, then they will use the “Comparability” and “Worth of Work” tests.

The Significant Services and Substantial Income Test

If you are the sole owner of a business, have no other employees, and are earning substantial income, this will result in a finding of SGA. In a business involving more than one person, you will be considered able to perform significant services if you contribute more than half the total time required to run the business, or if you spend more than 45 hours a month in the management of the business.

When considering whether you have substantial income as a self-employed person, SSA will calculate your countable income. This is the income you make from your business. You can subtract certain expenses. For example: If you have disability-related expenses so that you can work, these can be deducted from countable income. If your average countable income is over the SGA limit of $1,090 in 2015, then you have substantial income. Even if your countable income is less than the required $1,090 per month, you will still have substantial income from a business if the livelihood, which you get from the business, is comparable to what you had done before you became disabled, or is comparable to that of an unimpaired, self-employed person doing the same thing you do.

The Comparability Test

If you are not performing significant services or making substantial income, SSA will apply the comparability test. Is your work activity (hours spent on the business, skills, output, duties, and/or responsibilities) comparable to that of unimpaired people in the same community engaged in the same or similar businesses? If so, SSA will say that you can perform SGA.

The Worth of Work Test

Is the work that you do for your business worth more than $1,090 a month compared to what it would cost you to hire an employee to do your job? If so, SSA will say that you can perform SGA.