Significant Services and Substantial Income Test

Social Security Lawyers Helping Self-Employed Residents of Massachusetts

Applying for Social Security Disability Insurance (SSDI) as a self-employed individual can be a difficult task. Unlike individuals who work for a corporation or other entity, self-employed persons cannot simply turn to their W-2s or paychecks to determine whether they meet the income requirements for SSDI. Instead, they must undertake a more complicated task of evaluating income sources and business opportunities to determine their eligibility. In particular, they must utilize the significant services and substantial income test. At Kantrovitz & Associates, our Social Security attorneys can assist self-employed Massachusetts residents with pursuing benefits.

Evaluating Income and Employment

One common misunderstanding among individuals applying for SSDI is the belief that you cannot be employed in any fashion if you want to receive benefits. This is not entirely correct. Individuals can receive disability benefits while employed as long as they are not performing “substantial gainful activity.” For those employed in a wage-based position, substantial gainful activity occurs when an individual makes more than $1,090 a month. Thus, if a paycheck or W-2 indicates an income level above this threshold, generally an applicant cannot receive disability benefits.

For individuals who are self-employed, substantial gainful activity is evaluated in a different manner. Income and work performance is evaluated according to three different tests: the significant services and substantial income test, the comparability test, and the worth of work test. First and foremost is the significant services and substantial income test.

Evaluating Significant Services and Substantial Income

Under this test, if an individual provides significant services to his or her business and derives a substantial income from it, this is considered substantial gainful activity.

If you are the sole owner or employee for your business, the services you provide are automatically determined to be significant. If sole owners or workers receive more than $1,090 a month from these significant services, this is substantial gainful activity, and an individual is not eligible for SSDI. If you are self-employed but have employees who work for you, you engage in significant services if you provide more than half of the total time needed to manage your business or if you work more than 46 hours a month. Again, if you make more than $1,090 a month while performing these services, this is considered substantial gainful activity.

When determining whether an individual has made more than $1,090 in income for SSDI purposes, the SSA will look at the income you receive from your business, but it will then deduct certain expenses or business-related items. Thus, for instance, if you receive unpaid help from family members, have free equipment, or have certain expenses that you incur because of your disability, such as needing certain modifications to workspaces, these can all be deducted from the revenue that your business receives.

If, after these types of modifications are deducted, you still receive more than $1,090 a month, this is substantial income constituting substantial gainful activity. Additionally, even if you do not earn $1,090 a month, you may still receive substantial income if the income you receive from your business is similar to what you received before your disability started, or if it is similar to what non-disabled people with similar jobs or businesses make.

Discuss Your Eligibility for Government Benefits with a Massachusetts Attorney

Determining whether you qualify for SSDI if you work independently or run your own business can be challenging. The government benefits lawyers at Kantrovitz & Associates know how to evaluate the SSDI eligibility of self-employed individuals in Massachusetts and guide them through the application process. We represent individuals from throughout the Boston area and beyond, including in Norfolk, Middlesex, Essex, and Suffolk Counties. Contact our office for more information at (800) 367-0871 or online.