Self-Employed Workers and Substantial Gainful Activity

If you’re self-employed, Social Security may use different methods to figure out whether or not the work you do is above the level of Substantial Gainful Activity (SGA).

Social Security does not consider your income alone because the amount of money you actually get from your business may depend on many different factors. Instead, they use 3 tests.

If Social Security decides that you have not engaged in SGA using all 3 tests, you may qualify for SSDI benefits (assuming you meet all other eligibility requirements).

Note: This page is only for people who are self-employed. If you are not self-employed, you do not need to read this page. Click here to skip it.

Self-Employed: Test 1

If you supply services that are significant to the operation of your business and you get substantial income from the business, Social Security will likely decide that you have done SGA and you will not qualify for SSDI benefits.

What does Social Security mean by significant services and substantial income?

Significant services
  • If you operate a business (other than a farm) all by yourself, your services are considered significant.
  • If you and at least one other person run the business, your services are considered significant if you supply more than half of the management time. So, if it takes 60 hours a month to manage your business and you manage it for 45 of those hours, your services are considered significant.
Substantial income

Social Security will deduct your business expenses and the value of unpaid help, Impairment Related Work Expenses (IRWEs), and unincurred business expenses from your net income to figure out your net countable income. If that figure is greater than $1,220 per month, your income will be considered substantial.

If Social Security decides that you have not engaged in SGA under Test 1, Social Security will move on to Test 2.

Self -Employed: Test 2

Social Security will examine the work you do to see if it counts as SGA. They will look at things like hours worked, skills needed, responsibilities, and effort involved.

If the work you do is about the same as the work of nondisabled people who are in similar businesses in your community, Social Security will decide that you have engaged in SGA and you will not qualify for SSDI benefits.

If Social Security decides that you have not engaged in SGA under Test 2, Social Security will move on to Test 3.

Self-Employed: Test 3

Social Security will examine your monthly work. If your work is worth at least $1,220 per month in its impact on your business, or if you’d have to pay someone at least $1,220 per month to do that work, you’ve engaged in SGA.

If Social Security decides that you have not engaged in SGA under Test 3, you may qualify for SSDI benefits, if you meet all other program requirements.

People who are blind or over 55

If you are self-employed and blind, or if you are self-employed and over age 55, special SGA rules will apply to you. For more information, talk to a Benefits Planner.