Your Guide to Debt and BankruptcyYour Guide to Debt and Bankruptcy

About Me

Your Guide to Debt and Bankruptcy

About 10 years ago, I secured my dream job with one of the largest corporations in the country. The job came with a substantial increase in pay and I soon looked for a large house for my family. After living the life I dreamed of, I was let go from my current position. I had a large amount of savings, but the economy took a turn for the worse and savings were quickly drained. I soon became stressed about finances. I could not pay the mortgage and bill collectors started to call my house. I refused to be defeated though, so I met with a bankruptcy attorney instead. I live a much simpler life now with my family, and I want you to know that financial stress does not have to affect you for years. Read my blog to learn about bankruptcy, debt laws, and how to hire an attorney.

Self-Employment and Disability Benefit Cessation: Understand How the Review Process Works

Many people who receive Social Security disability benefits do a little self-employment in order to supplement their income. Social Security not only allows this but encourages it and has programs in place that allow you to work without jeopardizing your benefits and the medical insurance that comes with it. If your work eventually becomes what SSA calls "substantial gainful activity," you're allowed a grace period where you can continue working and receiving benefits at the same time—just to make sure that it works out.

Unfortunately, determining when someone who is self-employed has reached that substantial gainful activity (SGA) point can be complicated—and your benefits can be erroneously terminated. Here are some tips to avoid that problem.

Understand the criteria that Social Security uses to establish SGA for self-employed individuals.

The Social Security examiner will examine a few different points when determining whether or not your self-employment income is above the SGA amounts for the years involved:

  • Were your services toward the business significant?
    • In other words, were you the sole person operating the business and did you have to actually contribute work activity to keep it running? For example, if you are a freelance writer or bookkeeper, your services are clearly significant to the business. However, if you're business partners with your sister or have self-employment from rental income, you may not be contributing significantly to the operation of the business. Similarly, if you are receiving an income from a family-owned and operated business, even though you provide minimal services (like sweeping up after hours), SSA may not consider that significant because it recognizes that your family is likely trying to help you by providing you with a supplemental income in exchange for very little contribution.
  • Do you have significant unpaid help in order to operate your business?
    • There may be portions of your self-employment that are countable for tax purposes but not countable for the purposes of determining SGA. For example, you may operate a small jewelry-making business to make some income. While you design the pieces, you may receive unpaid help from your spouse, your children, your siblings, and even your friends to keep the business going. It's important to explain how this unpaid help affects your ability to maintain your income. For example, if your spouse has to transport you to trade shows and your children or friends have to set up your booth, that's important unpaid help. Similarly, if your spouse does all of the bookkeeping, packaging, and shipping duties related to the business, you want to make sure that Social Security understands this and what it would cost if you had to hire someone to do the job.
  • What expenses do you have that are necessary to enable you to keep working?
    • There are expenses that many disabled people have that aren't necessarily reflected on their tax returns—yet those expenses are important in order to allow them to work. For example, if you spend $100 a month on medication co-pays and $75 on co-pays for your visit to a pain clinic each month in order to get treatment that makes it possible for your to engage in any work activity, those expenses reduce the amount of monthly income that SSA counts. 

It's important to remember that SSA's rules on how income is calculated for a self-employed person and how IRS calculates those figures aren't always the same. Make sure you communicate clearly to SSA the limitations that you work under, any free help that you receive in order to maintain the business, the limited nature of your activities, and any expenses that you have that don't necessarily show up on your tax returns.

If your benefits are terminated due to a finding of SGA going back over a period of time after a work CDR is performed, immediately file an appeal. You only have 10 days from the date of your notice to file a request for reconsideration with a benefit continuation during your appeal—although you have a total of 60 days to file the actual appeal itself. That confuses a lot of people, which causes them to lose their benefits while the appeal is pending. You should also contact an attorney who handles disability claims for assistance so that you can get some help explaining how your work falls below the standard for cut-off.