Can I Qualify for Social Security Disability if I am Self-Employed?

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Most individuals who make contributions into the Social Security Disability (SSD) program do so through payroll deductions from the payroll check provided by their employer. However, if you are self-employed you cannot rely on the accounting or payroll department to handle your Social Security contributions. Instead, you must report your income directly to the IRS and pay all required taxes.

How is the SSD program funded?

The SSD program is considered to be an insurance program. As such, one must make contributions to the program to qualify for coverage. Typically employees will see a 6.2% payroll deduction on earnings of up to $117,000 and a 1.45% Medicare tax. Your employer also matches your 6.2% Social Security  contribution.  However, if you are self-employed the manner of paying your Social Security taxes differs. Rather than paying just the worker’s Social Security tax, you will be expected to pay the full 12.4% Social Security tax yourself. If you have wages through an employer and income through self-employment, then you should pay the taxes on your wages first.

To qualify for SSD benefits, you must have sufficient work credits

While Supplemental Security Income (SSI) benefits do not carry a work credit requirement,  SSD benefits do. Because SSD is an insurance program for workers who become sick, injured or otherwise unable to work, to receive SSD benefits you must have worked and paid into the Social Security system sufficient amounts through taxes. Each year, you may earn up to four work credits. One work credit is earned for each $1,200 of net income.

If your net earnings are less than $400 and your gross earnings are $600 or more when profits are less that $1,600, you may use the option reporting method so that your earnings still count towards Social Security. However, you may use this alternate reporting method only 5 times in your life except if you are a qualifying farmer. Qualifying farmers may use this method each year if they so choose. Working with an experienced Social Security disability attorney can help you understand this method of reporting and how it applies to your particular financial situation.

The number of work credits you will need are dependent on your age. Generally speaking, the older you are at the time of onset of your injury or condition, the more work credits you will need. F you were born prior to 1929, you will need 40 credits, ten years of work, to qualify for benefits. People born after 1929 will require less work credits. General situations of eligibility can include:

  • A worker who becomes disabled prior to age 24 – Workers who became disabled prior to their 24th birthday will typically require 6 work credits or 1 and a half years of work in the three years previous to your disability or illness.
  • A worker who becomes disabled between ages 24 and 30 – Workers who become disabled in this age range typically require credits for half the time between age 21 and the onset of the illness or disability.
  • A worker who becomes disabled between ages 31 and 42 – A worker who becomes disabled during this range of ages would typically need 20 work credits or 5 years of work.
  • A worker who becomes disabled at age 52 – A worker who has an onset date at age 52 would likely require 30 credits or 7 and a half years of work.

The foregoing is not exhaustive and there can be exceptions to the general guidelines as stated above.

Must I Satisfy any Other Requirements to Qualify for Self-Employed Social Security Benefits?

The foregoing has discussed one of the non-medical program requirements. That is, the work credit program requirement. The SSD program also has a number of other qualifications including:

  • Financial eligibility – Those who apply for the SSD program must be unable to work and earn significant income. This is measured and determined through substantial gainful activity (SGA).
  • Medical eligibility – To receive SSD benefits, one must have a injury or impairment that is severe. A severe impairment causes significant limitations in the things you are able to do and the work you are able to perform.
  • Insufficient RFC to perform other work – RFC, or residual functional capacity, refers to the things that you are still able to do despite your severe impairment. The Social Security Administration determines if you are able to perform your past work or if there is alternate employment available to you.

If you have are self-employed and wondering about the future or if you have suffered a severe injury or illness that has forced you to stop working, the social security disability lawyers at the Law Practice of Ken Kieklak may be able to help. For more than 20 years Ken Kieklak has worked with hard-working and dedicated Arkansans.  To schedule your free and confidential consultation, call (479) 251-7767 or contact us online.

 

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