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The Social Security Administration (SSA) does not count some resources that are essential to your means of self-support when SSA decides your initial and continuing eligibility for Supplemental Security Income (SSI).
SSA does not count property that you use in a trade or business (e.g., inventory) or use for work as an employee (e.g., tools or equipment). Other use of the items does not matter. See the trade or business section below for important information about corporations.
SSA does not count up to $6,000 of equity value of non-business property which you use to produce goods or services essential to daily activities (e.g., land used to produce vegetables or livestock solely for consumption by your household).
SSA does not count up to $6,000 of equity value of non-business income producing property if the property yields an annual rate of return of at least 6 percent (e.g., rental property). However, SSA does not consider liquid resources (e.g., stock, bonds, notes) as property essential to self-support unless you use them as part of a trade or business.
Property Essential to Self-Support (PESS) only applies to unincorporated for-profit businesses that produce "net earnings from self-employment" in the "trade or business" exclusion, such as sole proprietorships, partnerships, and Limited Liability Companies (LLC's).
Corporations do not produce self-employment income inherently. Corporations by nature pay wages to the employees and shareholder distributions or dividends to the owners - although corporations can (yet generally do not) pay self-employment income to the owners.
A corporation is by definition a separate legal entity and SSA counts the owner's share of a corporation as a resource, which cannot be excluded for PESS. To determine the value of a corporation, SSA may have the corporation's accountant give an estimate of the value of the corporation, taking into account the assets and liabilities, and then SSA will multiply that amount by the claimant's proportion of ownership to determine the value of the resource. Unfortunately, the normal $2000 personal resources limit still applies to the owner receiving SSI. Additional information about stock valuation may be found online in the SSA POMS at:
http://policy.ssa.gov/poms.nsf/lnx/0501140220
One possible solution to the problem of owning an incorporated self-employment business may be to set up a Limited Liability Company (LLC) instead that files taxes as a partnership LLC. This prevents the resources of the corporation from being counted as personal resources, and allows the owner to maintain SSI eligibility by keeping personal resources under the normal $2000 resource limits.
The above "Trade or Business" section is based on information generously provided in private communications by David Hammis of Griffin-Hammis Associates, LLC.
Social Security Considerations for Small Business Owners with Disabilities is a free booklet produced by Griffin-Hammis Associates, LLC that is intended to introduce basic self-employment and Social Security considerations while developing a small business with someone with a disability receiving SSI and/or SSDI. It can serve as a general guide for individuals with disabilities, family members, and others, in understanding how disability benefits interact with self-employment planning and ongoing self-employment development and expansion.
You can read or download the booklet in PDF format (requires Adobe Acrobat Reader) from:
http://www.griffinhammis.com/publications/SSAConsiderations.pdf
http://policy.ssa.gov/poms.nsf/lnx/0501130500
http://policy.ssa.gov/poms.nsf/lnx/0501130501
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