Filing for Social Security Disability When You Are Self-Employed

If I’m self-employed can I still file for Social Security Disability Benefits just like everyone else?

Author: Attorney Lonnie Roach
Updated: June 29, 2023

People who are self-employed are just as eligible for Social Security Disability benefits as individuals who are employed by a company or another person.

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People who are self-employed are just as eligible for Social Security Disability benefits as individuals who are employed by a company or another person.

You are self-employed if you operate a trade, business, or profession by yourself or with a partner, such as landscaping, bookkeeping, farming or being a landlord.

Business owners or individual contractors are just as susceptible to a debilitating illness or injury as anyone else. While those who work for a company or another person pay Social Security and Medicare taxes through monthly or weekly paychecks, self-employed persons pay self-employment taxes quarterly or annually. These estimated taxes include both Social Security and Medicare taxes.

To be considered self-employed by Social Security you must provide a significant service to your business or profession in one of the following ways:

•   You operate a one-person business and are the only person working; or
•    You co-own a business or have employees working for you and 1) you provide more than one-half the total time to manage the business, or 2) you supply more than 45 hours per month of management services; or
•   As a farmer you materially participate in the production or management of crops or livestock

To be eligible for Social Security Disability, you first must have accumulated enough work credits.

Self-employed individuals earn one credit each quarter in which they earn a certain amount, which in 2024 is $1,730. You must have a recent work history and between 20 and 40 work credits to qualify for SSDI; between one-quarter and one-half of those work credits must be from the last 10 years. If you haven’t earned enough work credits, you can apply for Social Security Income benefits (SSI) which is based on need and not past earnings.

Filing for Social Security Disability benefits is similar for those who are self-employed and those who are employed by a company or another person.

You must meet Social Security’s definition of disability, “as the inability to engage in any substantial gainful activity (SGA) by reason of any medically determinable physical or mental impairment(s) which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months” and be unable to work. You will need to fill out an application and provide medical documentation detailing your impairment and your inability to work. You will also be required to sign release forms, allowing Social Security to obtain any other information they need to evaluate your case, as well as past tax returns.

If you have been denied disability don’t give up! Contact a Disability lawyer at 512-454-4000 for a free consultation and get the benefits you deserve.

Social Security then determines if your work constitutes Substantial Gainful Activity (SGA) ($1,550 per month for non-blind applicants and $2,590 for blind applicants in 2024), using the “Countable Income Test” or the “Three Tests.”

If any of these tests shows that you are earning SGA, you will not be eligible for Social Security Disability benefits. Countable income is the profit earned from your livelihood based on your own work productivity.

Social Security deducts from your net earnings:

•    the value of any unpaid help given to you by a spouse, child, or friend
•   any expenses you incur to help you work with a disability such as home modifications, medications, and prosthetic devices
•   the cost of devices and equipment such as wheelchairs and hearing aids, used for both work and personal reasons
•   Expenses paid for you by someone else; for example, equipment given to you by an agency or training program
•   Soil bank payments (for farmers only)

The “Three Tests” Social Security uses to determine SGA are the Significant Services and Substantial Income Test, the Comparability Test, and the Worth of Work Test.

   Under the Significant Services and Substantial Income Test, you are considered to earn SGA if:

•   Your countable income is more than $1550 per month (in 2024), or
•   Your income is not more than $1550 per month (2024), but the income you earn is comparable to what it was before you became disabled, or
•    Your income is comparable to other individuals in your community who are not disabled and run the same type of business.

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  The Comparability Test compares the time and energy you contribute to your work with people in your community who are not disabled and performing the same work.

This test considers the hours you work, your duties, skills, and responsibilities as well as your energy output.

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  The Worth of Work Test determines your work constitutes SGA if the work you perform is worth more than $1550 per month (2024) in value to the business or worth more than $1550(2024) per month if compared to what it would cost to hire someone else to do your job.

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It may be a good idea for self-employed individuals to consider purchasing disability insurance through a private insurer for added income protection, especially those in an industry which carries a high risk of injury.

These policies can be confusing, so it’s important to understand the policy’s terms and definition of “disability.” Also, be aware that if you file a claim with a private insurance company, they will require you to file for Social Security Disability also and deduct any benefits you receive from insurance payouts. [See Long Term Disability Insurance blog]

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Applying for Social Security Disability benefits as a self-employed person can be complex.

A qualified Social Security Disability attorney can make the process much simpler and ensure a positive outcome.

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Disability benefits are an important source of income for those who are unable to work. If you not able to work due to accident or illness, you may be eligible for Social Security Disability or Long Term Disability benefits. If you have applied for benefits and been denied, contact the attorneys at Bemis, Roach and Reed for a free consultation. Call 512-454-4000 and get help NOW.

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Author: Attorney Lonnie Roach has been practicing law for over 29 years. He is Superlawyers rated by Thomson Reuters and is Top AV Preeminent® and Client Champion rated by Martindale Hubbell. Through his extensive litigation Mr. Roach obtained board certifications from the Texas Board of Legal Specialization. Lonnie is admitted to practice in the United States District Court - all Texas Districts and the U.S. Court of Appeals, Fifth Circuit. Highly experienced in Long Term Disability denials and appeals governed by the “ERISA” Mr. Roach is a member of the Texas Trial Lawyers Association, Austin Bar Association, and is a past the director of the Capital Area Trial Lawyers Association (Director 1999-2005) Mr. Roach and all the members of Bemis, Roach & Reed have been active participants in the Travis County Lawyer referral service.