I’m Self-Employed: Am I Eligible for Social Security Disability Benefits?

Yes, if you used to be self-employed, and while doing so, paid self-employment (SECA) taxes. These taxes will have earned you eligibility for the disability program, just as FICA taxes do for employees of a business.

If you are still self-employed, you may still be eligible for disability benefits, but like any other person filing for disability, Social Security will evaluate if you are earning “substantial gainful activity”, or SGA. Unlike employees of a company, however, Social Security will look at more than just your income.

Social Security uses the Three Tests:

1. “Significant Services and Income” Test: if you are the sole owner or have employees but contribute more than half the time needed to manage the business, Social Security will conclude your services are significant. They will also look at your average income and if it exceeds the allowable amount per month ($1350.00 in 2022) your earnings will disqualify you. There are some deductions from your income that could keep you under this limit.
2. “Comparability” Test: if you get to this step, Social Security compares the similarity of your work against an unimpaired person’s work in a similar business. If the amount and kind of your work activity is found equivalent to the unimpaired person’s, you will fail this test.
3. “Worth of Work” Test: similar to #1, if you earn more than $1350.00/month (in 2022) OR the value of your work is worth more than what it would cost to hire someone to do your job, you fail this test.

All these tests and rules may seem overwhelming, but don’t give up!

In fact, Social Security even has some work incentives that can be helping in starting or maintaining a business, with a goal of self-sufficiency down the road. There are at least five major programs that can assist you, including some that help by excluding certain real property related to your business, earnings exclusions for students, reduction in your income total due to purchases of items and services related to your disability that allow you to perform work duties, exclusions for blindness, and the ability to set aside some income for future work goals. A Community Work Incentives Coordinator (CWIC) at your local Social Security office provide more information.

Keeping good documentation of earnings and tax filings will be essential for anyone seeking disability who is or was self-employed. Reach out to Midwest with questions, we’re here to help!