For someone living with a disability, it may be difficult to generate an income that is sufficient enough to allow them to survive on their own. Many people with disabilities are either unemployed or underemployed. Those who receive any type of government assistance are at risk of losing their benefits if they find other ways to earn additional income to cover their living expenses.
In some circumstances, self-employment may be a viable way to increase income without losing benefits. It allows the person to have a flexible schedule and the ability, in most cases, to work from home. Self-employment options can be anything from freelance photography to running a cleaning business. How the earnings from self-employment affect public assistance depends upon the type and the amount of those earnings.
Two of the most common government assistance programs that are utilized by people with disabilities — Social Security Disability Income (SSDI) and Supplemental Security Income (SSI) — allow recipients to have up to a set amount of earnings without losing any of their benefits. As of 2020, that amount for SSDI eligibility is $1260 per month. For SSI, the amount of income allowed is a bit more complicated. Both earned and unearned income are considered, and the type of earned income makes a difference.
Self-Employment, Wages, or Hobby
If the money comes from an activity that would be considered a hobby, such as selling paintings or hand-crafted jewelry, it’s considered unearned income. While those earnings have no effect on SSDI, they will cause a dollar-for-dollar reduction in SSI benefits for anything over $20.
Income generated from wages can affect both SSDI and SSI benefits. For SSDI, the gross wages count towards the monthly allowed amount. SSI, however, will decrease at a rate of 50 cents for every dollar earned over $85 received during that month. If the individual has any work expenses related to their impairment, both SSI and SSDI will account for those expenses by allowing a deduction from the gross wages.
When the source of income is self-employment, the amount is based on gross earnings and allowable deductions. While SSDI guidelines are fairly straightforward in defining self-employment income, the SSI rules are more complicated. How benefits are affected, on the other hand, involves some complex definitions and calculations for SSDI.
SSDI calculates an individual’s income based on when the income was earned rather than when it was received. Allowable deductions, according to SSDI guidelines, include expenses related to the person’s disability, a portion of self-employment payroll taxes, and unpaid assistance from others. SSDI also gives the individual a nine-month trial work period during which benefits are not affected by earnings.
If you or a family member are a recipient of SSI or SSDI and they plan on generating additional income through self-employment, consult our Tampa special needs attorneys who are well-versed in Social Security benefits and how they can affect future planning situations. We can advise you on how much and what type of income you or your loved one can bring in without losing your benefits. To schedule a consultation at our Brandon law firm, call (813) 438-8503.