Can Self-Employed People Get Social Security Disability?

Being self-employed can be a wonderful thing — especially since it means being your own boss. No higher ups to answer to, and no one to tell you what to do. But what happens if something goes awry, and you find yourself too sick or injured to work?  Then who do you turn to? Because it’s not like you have a built-in support network when you’re the one running the show. Or do you? We recently got such a question from one of our readers who asks: “I’m self-employed and totally reliant on no one but myself. I have had almost no dealings with the government. Can I get disability?”

The answer is — it depends. But there are cases where a self-employed person can receive disability benefits through the Social Security Administration (SSA). Read on to determine if you meet the qualifying criteria.

What is Needed to Qualify for Social Security Disability Benefits?

For anyone applying for Social Security Disability Insurance (SSDI) benefits, there are three basic qualifications to meet:

• You must show a comprehensive work record (approximately 40 work credits) and a history of paying into Social Security.
• You have a long-lasting medical condition that meets the SSA’s definition of disability.
• Your condition renders you incapable of working for 12 months or more.

In other words, SSDI doesn’t apply for short-term disability claims, workers’ compensation cases, or partial disability. This is a program specifically designed for adults suffering from long-term ailments that preclude them from gainful employment. And yes, that includes self-employment.

The tricky part for the self-employed, however, is determining if they’ve met the tax requirements and have enough work credits. And then in addition to showing a medical condition, they must also prove an inability to continue substantial gainful employment.

All that to say, while self-employed individuals can qualify for SSDI, it’s a little more complicated.

How Does the SSA Determine if a Self-Employed Individual Financially Qualifies for Disability?

An individual working for an employer will automatically have their Social Security contributions withheld from their paychecks as FICA taxes. That means there is a high likelihood that they’ll financially qualify for disability if they can show enough recent work. For most SSDI claims, a disabled individual must show employment for five of the last 10 years to qualify.

With the self-employed, however, they must make payments into Social Security themselves. Self-employed people typically should pay self-employment taxes (SECA) — which includes paying into Social Security — on a quarterly or annual basis. This happens when they file their estimated taxes or income tax returns.

In this way, the self-employed may qualify for SSDI just like employees whose employer pays FICA taxes on their behalf. However, self-employed individuals must pay SECA taxes, or they will not qualify. For example, some business owners — such a owners of S corporations — aren’t required to pay the self-employment tax. In that case, they would be ineligible for SSDI.

Basically, to get disability whether you are working for an employer, or self-employed, you must pay into the SSA system.

How Can the Self-Employed Earn Work Credits?

To qualify for SSDI, an individual must show 40 work credits over the course of their life (the duration test). And 20 of those credits must be within the last 10 years to satisfy the recent work test. This stands for both employed and self-employed workers.

The SSA bases work credits on the amount of earnings an individual makes. The amount it takes to earn one credit changes annually. In 2024, you receive 1 credit for each $1,640 of earnings, up to the maximum of 4 credits per year. That means, to get the max 4 credits for this current year, you must earn $6,560. The SSA determines an individual’s work credits from the amount on which they pay FICA or SECA taxes.

How Much Can a Person Make Each Month and Still Get Disability?

Different than the amount necessary for work credits is the maximum income a disabled person can make each month. This is “substantial gainful activity” (SGA). It is how the SSA determines if a person’s disability is keeping them from doing any work for 12 months.

For the traditionally employed, the SSA says that in 2024individuals cannot make more than $1,550/month from working. That number jumps to $2,590 for blind people. If a benefit applicant’s monthly income exceeds the current SGA amount, the SSA will reject their claim.

For the self-employed, however, the SSA recognizes that income alone is not determinant of work ability. This is because many self-employed individuals receive income through a variety of sources beyond just wages. These might include freelance contracts, personal businesses, capital investments, and profit-sharing agreements. Additionally, they may also provide valuable services to their business regardless of whether they receive any income for their involvement.

How Will the SSA Evaluate “Substantial Gainful Activity” for the Self-Employed?

Because of the differences between wage work and self-employment, the SSA considers more than just numbers when determining self-employed SGA.

The SSA will evaluate the work activity of any self-employed disability applicant through the following three tests:

• Do you render significant services to your business and that business provides substantial income as a result? If so, the SSA will determine that you’re engaging in SGA and deny your claim. If not, they will then evaluate you on the next two tests.
• Is your work comparable with that of an unimpaired person in your community whose business is like yours? That means, are you doing things that are similar in skills, hours, duties, and energy output as others. If so, that will also count as SGA and disqualify your claim.
• Is the work you are doing worth more than the current SGA limit? In other words, in 2024 is the contribution you’re still making to your business worth more than $1,550/month? If the value of what you’re doing is higher than that, it is SGA. Same, if the work you’re doing would cost an employer more than $1,550/month to employ someone else to do it.

If you answer “no” to these tests and can show medical documentation for your condition, then you may qualify for SSDI.

Applying for Disability Benefits if You’re Self-Employed

Circling back to our reader’s question, ultimately it is possible for someone who is self-employed to qualify for disability benefits. But there are many pieces to the puzzle.

At the core level, an applicant must show medical evidence of their condition and meet strict financial requirements. And for SSDI, that includes paying into Social Security for years prior to the onset of the disabling condition.

For those who don’t meet the criteria for SSDI, there is still the possibility for Supplemental Security Income (SSI) benefits. That is because the SSA does not base SSI benefits on having a sufficient work history. Instead, the SSA looks at financial need and severe medical limitations. However, SSI benefits routinely only go to disabled individuals with very low incomes/assets.

If you’re self-employed and thinking of applying for SSDI or SSI, consider consulting with a Social Security disability attorney first. The disability process is intricate, and a skilled lawyer can help you navigate the system. Plus, they’ll work on contingency, so it won’t cost you a penny unless they positively settle your claim.

In other words, if you usually do everything all alone, this is one time you don’t have to fly solo.

Ready to see if you may qualify? Complete your free online SSD benefits evaluation now!