DISABILITY BENEFITS FOR the SELF-EMPLOYED?

An individual engaged in substantial gainful activity (SGA) is not qualified for Social Security disability benefits.  In 2012, the monetary benefit that equals SGA level is pretax earnings of at least $1,010 per month ($12,120 annually).  If an individual owns or invests in a business and earns at least $1,010 per month, does that disqualify him or her for Social Security disability?  Maybe not.

While self-employment income may certainly be counted as SGA, there is more involved than a simple determination of the amount of money earned.  Social Security Ruling 83-34 provides several factors, not just income, to determine whether a self-employed individual is engaged in SGA.  The two significant tests of SGA for self-employed individuals are (a) Does the individual render services that are "significant to the operation of the business?" and (b) Does the individual receive "substantial income from the business?"  If the income received amounts to SGA levels, then it should be determined whether the claimant's work activity is comparable to the work of unimpaired persons who are engaged in the same type of business, or that the individual's work is "clearly worth more" than the annual SGA earnings guideline ($12,120 for 2012).  Questions that may be helpful in evaluating SGA for self-employed persons are:

• Does the claimant work for or provide any valuable service(s) to the business?
• How much time does the claimant devote to operating or serving the business?
• How much capital investment does the claimant have in the enterprise?
• Who else besides the claimant is involved in running the business?
• On what basis are the profits distributed?
• How does the claimant's work activities compare to those of an unimpaired person who is engaged in the same type of business in the same community?

In Weber v. Astrue, on January 31, 2012, a US district court held that income alone does not necessarily establish that a Social Security disability claimant is engaged in substantial gainful activity.  

If self-employment income is realized chiefly from capital investment in a business enterprise, then realizing a profit from the investment may not be substantial gainful activity for Social Security disability purposes. 

For information about the Forsythe Firm and how it may help you with a Social Security disability case in Huntsville or Alabama, please click this link.