SSDI and Self-Employment: How to Determine Your Eligibility

If you pay Social Security taxes, you likely qualify for Social Security Disability Insurance, regardless of your employment type. But unlike full-time employees, self-employed individuals face unique challenges when it comes to applying for disability benefits. Self-employment work can look very different for individual contractors, gig workers, and small business owners, and establishing eligibility for disability can be tricky. Learn more about work credits and essential questions to determine your eligibility.

Can you collect Social Security disability if you are self-employed?

Yes, self-employed workers can get disability benefits if they meet the medical and technical eligibility requirements. Social Security Disability Insurance (SSDI) is a form of insurance — you pay into Social Security through taxes over time, and you can receive disability benefits if you need them. 

Independent contractors, freelancers, consultants, or gig workers are responsible for filing a tax return each year to report their income and pay the necessary taxes. 

Federal Insurance Contributions Act (FICA) taxes, also known as payroll taxes, are automatically taken out of paychecks for full-time employees. Self-employed workers, on the other hand, are responsible for paying self-employment taxes to fund Social Security and Medicare.

Can business owners qualify for disability benefits?

If you own a business, you might not be eligible for Social Security Disability Insurance. Business owners who do not pay themselves a salary — including people who pay themselves in company dividends, but not with a set income — do not pay Social Security taxes.

Similarly, the owner of an S-corp is not required to pay self-employment taxes on company profits. This means they would not be eligible to collect SSDI unless they paid taxes through either an income from their own company, or other jobs.

Eligibility comes down to paying federal taxes. Regardless of how you set up your business, if you pay Social Security taxes, you should be eligible for disability benefits.

How Social Security works for self-employed individuals

If you are self-employed, the eligibility requirements for Social Security disability benefits differ from traditional, full-time employees. The Social Security Administration will consider the following to determine your eligibility:

• Medical eligibility: You must have an impairment or medical condition that will leave you out of work for at least one year. Your condition must meet the SSA’s definition of disability.

• SGA threshold: The SSA will examine your net income from your self-employment work, after business deductions. Your monthly earnings must not exceed the limit for substantial gainful activity. 

• Work credits: To qualify for SSDI, you must have worked for at least five out of the last 10 years. You typically need 40 work credits to qualify, 20 of which were earned in the last 10 years, ending with the year you became disabled. 

If you are paid in cash or under the table and don’t report your income to the IRS, you will not qualify for Social Security Disability Insurance. But you might be eligible for state short-term disability benefits or Supplemental Security Income if you have a qualifying medical condition.

Can self-employed workers get SSI?

Yes, self-employed workers can be eligible for SSI. However, you’ll need to meet the income and asset limits, which are fairly strict:

• You have less than $2,000 in assets if you are single ($3,000 if you are married), and you (or your spouse) don’t have any other significant income

And of course, you’ll need to meet all of the other SSI requirements, too — such as being unable to work for at least a year due to your medical condition. 

Can self-employed workers get short-term disability?

Yes, self-employed workers can be eligible for short-term disability benefits. Five states offer short-term disability benefits: California, Hawaii, New Jersey, New York, and Rhode Island. 

Each of these states has separate work requirements. Short-term disability benefits typically last three to six months and offer about 60 percent of your regular paycheck. 

If you have a private short-term disability plan, you should be covered as long as the policy went into effect before your condition made you unable to work.

SGA criteria for self-employed individuals

To be eligible for benefits, an individual must be unable to engage in substantial gainful activity also known as SGA. The Social Security Administration considers work that requires significant physical or mental activity to be “substantial,” and it’s “gainful” if you do it for pay. The SSA evaluates self-employed individuals for SGA using three tests:

1. Significant services and substantial income: If your contributions to the business are significant to the operation of the business, or if you receive a substantial income, the SSA might determine your work activity is SGA.

2. Comparability of work activity: The SSA will determine whether your work activity, including your hours and responsibilities, compares to other workers in similar roles who are unimpaired. Your work activity might be SGA if it is comparable. 

3. Worth of work activity: The SSA’s third test examines your worth as a worker. If your productivity is lower than other comparable workers, but your services are significant to the business operations and you exceed the amount in the SGA earnings guidelines, you might be SGA. 

What is SGA for 2024?

In 2024, the Social Security Administration will consider work SGA if your monthly income is $1,550, or $2,590 if you are blind.  For self-employed individuals, the SSA will calculate self-employment income as total income, minus operating expenses.

If you’re a gig worker and the number of hours you work shifts from week to week, it can be difficult to calculate your monthly income. It can be helpful to work with a financial advisor before beginning the disability application process to determine your technical eligibility.

What are work credits?

The Social Security Administration awards work credits each year based on your income. For every $1,640 in your paycheck in 2023 — whether that’s wages or self-employment income — you get one credit. You can earn a total of four credits per year. In many cases, self-employed people either have irregular income or have already stopped working due to a medical condition. Since you need a large number of recent work credits to be eligible for SSDI, this could make it difficult for you to qualify. 

How to check your work credits

You need at least 40 work credits to be eligible for disability benefits. If you don’t know how many credits you have, you can create a free account on the SSA’s website to check. You can also check your number of work credits by calling or visiting your local SSA office.

Keep in mind that if you’re planning to work with a lawyer on your disability application, they’re going to ask you to check your work credits to make sure you qualify before moving forward.

Self-employment benefits: 5 key questions to determine eligibility

If you are self-employed, the following questions can help you figure out whether you qualify for disability benefits. Generally, if you answer “yes” to all or most of these, you likely will qualify:

1. During all of your jobs in the past 15 years, did you receive a paycheck?

2. Before starting your previous jobs, did you fill out a copy of Form I-9?

3. If you were working for another company, did you pay any taxes out of your paychecks?

4. Did you get 1099-MISC or 1099-NEC tax forms from your previous employers?

5. While you were working, did you file an income tax return (Form 1040) every year?

The surest way to know if you are technically eligible for disability benefits is to double-check your work credits.

Get help with your application

The disability application process is confusing, especially for self-employed workers. Check out our comprehensive resource library to guide your disability application.

If you are interested in working with a lawyer on your application, we can connect you with a qualified professional, too. Get started by taking our 2-minute disability quiz and a team member will be in touch to learn more information.

Related resources:

What Is Substantial Gainful Activity (SGA)?

By Jackie Jakab

What Medical Conditions Qualify for Social Security Disability?

By Jackie Jakab