No doubt about it, going into self-employment offers one of the best ways to earn salaries. But how can self-employed people secure disability benefits?
Salaried employees pay social security taxes every month by having them withheld from their paychecks. While the deduction may seem painful, it gives you peace of mind and financial security in unexpected circumstances.
The good thing about paying them is that you qualify for disability benefits. It means that you can claim the benefits if you lose your ability to work down the line.
How to secure disability benefits
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Things differ for self-employed individuals and business owners. This is because they pay these taxes quarterly or annually while filing their tax returns.
However, they are also eligible for claiming Social Security disability insurance (SSDI) benefits, just as employed individuals are.
But the calculation of benefits may differ. This is because the Social Security Administration determines them according to the impact on their ability to engage in substantial gainful activity.
It is vital to understand the nitty-gritty of these cases to ensure that you do not settle for less as a self-employed person. Let us explain how disability benefits work for the self-employed.
Like salaried employees, self-employed individuals earn one credit per quarter on earning a minimum amount of money. The minimum amount that gets you one Social Security work credit is $1,510 in 2022. The SSA uses your work history to decide your eligibility for disability benefits.
Likewise, they use it to determine the eligibility of your family for claiming survivor benefits after your death. The number of credits you must have to qualify for the benefits depends on your age when you become disabled.
Your monthly disability payments are based on the money earned from self-employment along with regular employment earnings if applicable.
It means that you can get a higher monthly benefit check if your tax return shows more earnings. Remember that you must report net business profits rather than your gross earnings as a self-employed business owner.
#2]. Determining substantial gainful activity
If you want to qualify for SSI disability benefits as a self-employed person, you must establish the inability to engage in a substantial gainful activity. The SSA applies three tests to decide if your work activity is a substantial gainful one. These include the following:
- Substantial Income Test: You can provide significant services and earn $1,350 or more in average monthly income (the amount is $2,260 for blind individuals).
- The Comparability Test: The work is comparable to people without disabilities engaged in similar businesses in the same community.
- The Worth of Work Test: The work is worth $1,310 per month when compared to the cost of hiring someone else to do the job.
#3]. Getting disability benefits as a self-employed individual
As a self-employed person, there is always a possibility of becoming disabled before earning enough credits to qualify for SSDI. You can consult a social security disability lawyer to explore your options for assistance.
The good thing is that you may still apply for Supplemental Security Income (SSI), which is not affected by your earnings record. However, Social Security Disability Insurance (SSDI) benefits ensure a higher disability income than the SSI program.
Whichever option you apply with, the same definition of disability and evaluation process applies to determine your eligibility for the benefits.
The SSA will start by checking whether you are engaged in substantial gainful activity even before looking at your medical impairments. If you are working and making the minimum amount of money with self-employment, the SSA may deem you as not disabled and deny your disability claim altogether.
#4]. Starting a disability claim
The process for filing a disability claim through the SSA as a self-employed person is similar to a regular one for salaried individuals. You will have to fill out an application and provide documentation of your medical condition that makes you unable to work.
The good thing is that you have the option to submit the application online. Also, you need to sign release forms to let the SSA request additional records they may require to review your claim. Since you are self-employed, you will also have to submit your past tax returns during the application process.
However, you must provide overwhelming evidence of a disability whatever your professional status. This is the best way to get the best shot at the approval of your disability claims. The SSA is known for denying the majority of claims, so you must go the extra mile to strengthen your application.
Moreover, the complex system of legal jargon, medical terms, tight deadlines, and strict criteria can give you more stress than you imagine. The best way to handle these concerns is by seeking the advice of a legal expert.