Countable Income Test

Massachusetts Attorneys Representing Social Security Applicants

Applying for disability benefits as a self-employed individual can be a particularly complicated venture. Unlike many individuals, you may not have W-2s to rely on to substantiate your income, or may find that your income fluctuates drastically depending on the time of year, or the strength of the economy. This makes it difficult for the government to evaluate whether you are truly unable to work, or simply underemployed. At Kantrovitz & Associates, P.C., our Social Security attorneys regularly work with self-employed Massachusetts residents to help them understand the hurdles they may face in applying for benefits.

Self-Employment and Substantial Gainful Activity

One of the initial determinations that disability examiners make when reviewing an application for disability benefits is whether the applicant is engaged in substantial gainful activity (SGA), more generally understood as a certain level of employment. This is because disability benefits are reserved for those who largely cannot work due to their mental or physical disabilities. For traditional employees, SGA is determined by looking at wages received over a monthly period. If the wages are above a certain threshold, then the applicant has SGA and is ineglible for disability benefits.

For self-employed applicants, the SGA determination is a bit trickier because employment, and income, may be non-traditional. Rather than looking at W-2s or pay stubs, the SSA instead turns to two different tests. For those individuals who have been receiving disability for 24 months or more and are undergoing a continuing disability review, the applicable test is known as the countable income test.

The Countable Income Test

The countable income test is applicable only to existing SSDI beneficiaries who are having their eligibility reviewed, or who may be considering starting a small business or enterprise and wonder whether it will affect their SSDI benefits.

Under the countable income test, a recipient’s income must be less than $1,090 a month, unless the recipient can show that he or she is not providing “significant services” to a self-employment business. First, recipients must determine what counts as countable income. Countable income is defined as the portion of salary or profits that an individual earns from self-employment based solely on his or her own productivity. In order to reach a countable income number, a self-employed individual must take net earnings and then subtract the value of unpaid help provided to the business by a third party, any business expenses that someone else paid for, and any impairment-related work expenses. If the resulting number is less than $1,090, the recipient will not have engaged in SGA.

If the number is more than $1,090, the recipient may continue to receive benefits only if he or she did not provide significant services to the business. Significant services are defined as either (1) engage in sole ownership of a business or (2) providing more than half the time needed to run a business (or more than 45 hours per month) where the business has one more employees.

Lawyers Advising Recipients on Continued Disability Status in Massachusetts

If you are a long-term disability recipient coming up for review, or you are considering starting your own small business, it is important to understand how self-employment can affect your disability status. Determining eligibility and SGA under the countable income test can be confusing and may require a careful accounting of potential business income and expenses. At Kantrovitz & Associates, P.C., our disability benefits lawyers can help you honestly evaluate the possible impact of your Massachusetts business on your Social Security benefits. If you live in the Boston metro area, or surrounding communities such as Norfolk or Middlesex Counties, or the Merrimack River area, contact us for more information at (800) 367-0871 or online.