Social Security When You Are Self-Employed

Collecting Social Security Disability Insurance (SSDI) when you’re self-employed is a little different than if you were to have a traditional employer. However, with the information below to guide you, we’re confident you will have everything you need to make the most informed decisions if and/or when the time comes.

Who Is Considered Self-Employed

According to the Social Security Administration, in order to be considered self-employed you must “operate a trade, business, or profession, either by yourself or as a partner.”  If you are self-employed, you will be responsible for reporting your own earnings and pay your own taxes, including Social Security and Medicare.

Earning Credits

Just like any other gainful employee, self-employed people also receive “Social Security credits” for earning annually, which are required to receive SSDI. As of 2019, a person must make at least $1,360 in order to earn one credit, with a maximum of four credits per year able to be earned ($5,440+ annually). Typically, in order for a person to qualify for SSDI benefits they will need to have earned 40 credits, though if you become disabled at a young age this number may be significantly lowered to accommodate limited work experience. Keep in mind, however, if you’re ever in a situation in which you have not earned enough credits to qualify for SSDI, you can apply for Supplemental Security Income (SSI) instead – which does not depend on your credits.

Paying Self-Employment Taxes

If you are self-employed, you are responsible for paying the entire 12.4% for Social Security and 2.9% for Medicare so long as you are earnings are more than $400. This applies to all self-employed persons unless you’ve earned more than $200,000 ($250,000 if married and filing jointly), then you will need to pay an additional 0.9% for Medicare.

“Substantial Gainful Activity”

In order to be approved for SSDI, you must be able to prove that you’re unable to “engage in substantial gainful activity” (SGA). As of 2019, this means you’re unable to make more than $1,220 per month because of your disability; unless you’re blind, then that figure is increased to $2,040. Furthermore, applicants will often be put through “The Three Tests” to confirm that their work activity is in fact SGA. For a person’s work to be considered SGA, it must:

• Provide “significant services to the business” and result in at least $1,220 per month in income
• Be “comparable to the work of persons without disability in their community engaged in the same or similar businesses,” or
• Be worth at least “$1,220 per month in terms of its effect on the business or what it saves them from having to pay an employee to do the work.”

Starting A Claim

To apply for disability through the SSA, please call us at 313.964.4900 or fill out the form in the sidebar or on our contact page so we can assist you with your application, to keep things consistent. We will need  any medical documentation that help prove your existing condition(s) are preventing you from working. You may also need to sign some release forms to allow the SSA to obtain additional information to build a case and consider the claim. And while this is almost exactly the same process for those who are self-employed, self-employed people will also need to submit past tax forms as well.

Of course, as always, if you have any questions regarding your ability to obtain Social Security disability benefits based on your employment status, Social Security credits, or anything else, you can always get in touch with our incredible Social Security disability attorneys at Aiello Law Group. We can’t wait to help! Call us, today, at 313.964.4900 or fill out the form in the sidebar or on our contact page, and learn more about how we can help you.