The Social Security Disability claim system is challenging no matter where you were employed before your disability. Furthermore, if you become disabled, while running your own business or being an independent contractor; the process becomes even more complicated. Knisley Law Offices, however, wants you to know that receiving Social Security Disability Income (SSDI) is still possible for you, and they want to teach you how to give your claim the best chance at success after years of paying into SSDI as a self-employed worker.
How Are Self-Employed People Eligible For Social Security Disability Income?
Self-employed workers pay into the Social Security and Medicare systems through self-employment taxes on Form 1040-SE each year. If you have $4,880 or more in profit from your business or work for the year, you earn four quarterly credits. This gives you the same credit in the system as someone who has worked as an employee for that full year.
Depending on your age, you need to have paid into the Social Security system for a certain number of quarters, either as an employee or by paying the minimum in self-employment taxes. The maximum number of credits required is 10 years worth, or 40 quarterly credits.
Self-employed workers, including freelancers, small business owners, and independent contractors do not officially have an employer who pays the employer contribution portion of the taxes. You, as a self-employed individual, must pay both sides of the contribution.
Theoretically, if you become disabled, your access to benefits should be the same as someone who has worked for someone else. In practice, this is not necessarily true.
Common Stumbling Blocks for Self-Employed Social Security Disability Claims
SSDI evaluates the medical evidence for your disability and whether you are able to continue with ‘Substantial Gainful Activity,’ or SGA. The terms ‘substantial’ and ‘gainful’ mean that you are doing significant physical or mental activity in any kind of work that people usually get paid to perform.
The gainful part is often the stumbling block for the previously self-employed. People who use time during their disability to volunteer, plan for future projects, or help a family member with a business can be declined for SGA reasons.
If the work you are doing as a volunteer (or in an unpaid position but may result in business profit later) is “worth” more than $1,090 a month, it is considered “gainful.” Your work for your previous business or a new business you started after becoming disabled could be considered SGA, even if you take a net loss.
Social Security looks at your SGA work ability at the time you make the original claim as well as 24 months into your benefits. They call this evaluation “The Three Tests.” This assessment consists of the following questions:
Are you rendering significant services to the business?
Has the business earned more than $1,090 a month?
Is your work is comparable to the work of persons without disability in your community in similar businesses?
Is your work worth more than SGA level in terms of the effect on the business or what you would pay if you hired an employee to do the work?
If you were to answer “yes” to any of these questions, Social Security would say that you are not – or no longer – disabled.
How to Improve Your Chances for a Self-Employed Disability Claim
If you were an independent contractor or owned your own business and became disabled, you should talk with an SSDI expert, like us at Knisley Law, to make sure that you are not accidentally performing SGA-level work for your old business or whoever took it over when you became sick or injured.
Your self-employment taxes have paid your fair share into the SSDI insurance system. Do not let technicalities and legal mistakes keep you from the support you deserve. Contact us today to discuss your case and give your claim the best chance of success.