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Self-Employment Income and SGA - SSI/DI

A self-employed individual will be considered by SSA to be engaged in Substantial Gainful Activity (SGA) if any one of three tests below applies. If the individual has not engaged in SGA under test one, then SSA considers tests two and three. SSA evaluates the individual's work activity based on the value of services to the business regardless of whether the individual receives an immediate income for the services.

1. Self-Employed Individual (Non-Blind)

a. Test One--Significant Services and Substantial Income

Individuals are determined to be engaging in SGA if the services rendered in any year by a non-blind individual are significant to the operation of the business under current guides and he/she receives from it a substantial income as determined below:

Significant Services:

For self-employed persons other than farm landlords, the test of whether services are significant is dependent upon whether the business involves the services of just one person or more than one person. In one-person businesses in which self-employed persons engage in their trade or profession by themselves without employees, partners, or other assistants (e.g., carpenters, gardeners, handymen, nurses, bookkeepers and people in numerous other business operations), the services are necessarily "significant." In a business involving the services of more than one person, a sole owner or partner will be found to be rendering significant services if the individual either contributes more than half of the total time required for management of the business or renders management services for more than 45 hours a month regardless of the total management time required by the business.

For self-employed persons who are farm landlords (i.e., people who rent their farmland to other farmers), if their services meet the test of "material participation" in the activities of the farm, their services are considered significant.

Substantial Income:

A self-employed person will have substantial income from a business if "countable income" from the business averages more than the SGA level, or if the livelihood which the person derives from the business is comparable to either that which he/she had before becoming disabled or that of unimpaired self-employed individuals in the community engaged in the same or similar businesses as their means of livelihood; or

b. Test Two--Comparability of Work Activity

The work activity of a non-blind individual at any time (in terms of all relevant factors such as hours, skills, energy output, efficiency, duties, and responsibilities) is comparable to that of unimpaired individuals in the same community engaged in the same or similar business as their means of livelihood; or

c. Test Three--Worth of Work Activity

The work activity of a non-blind person at any time (although not comparable to that of unimpaired individuals) is nevertheless reasonably worth over the SGA level when considered in terms of its effect on business, or when compared to the salary an owner would pay to an employee for such duties in that business setting.

2. Statutorily Blind Individual - After 1977

When average "countable income" of a blind person does not exceed the SGA level, a finding that work is not SGA will be made without considering the comparability and worth of work test (tests b and c above).

Countable Income

In the case of self-employed persons, net income may have to be reduced by deducting such things as the value of any significant amount of unpaid help furnished the individual, impairment-related work expenses (if not already deducted as a business expense), unincurred business expenses paid by someone other than the self-employed individual (as well as the value of things provided), and soil bank payments if they were included as farm income.

Additional Information

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

Source

SSA POMS at:
http://policy.ssa.gov/poms.nsf/lnx/0424001025#D1

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