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Social Security Question:

Reporting future income if I start my own business

Social Security Answer:

Hi there, THANK YOU so much for offering this service! It has been so hard to find someone to go to for solid information. I finally found you by searching Google for former SSA employees advice, or some phrase like that, hoping I could find someone who would share their knowledge and explain, if possible, the complicated rules :)

Age: 47, Female
Disability: Depression, I think it is 2960 code
Began getting benefits: July 2007
Onset date: July 2005 (I got back pay for this)
Diagnosed: way back in 1995 or 98
TWP: all used up by working for 9 months, as decided by Soc. Security. I did not report wages until tax time, and they were not happy about that.

I want to try working again, by opening my own business – as a writer or selling earrings online. This will make me start using my EPE when I start earning enough for SGA. I think I understand that part. But I don't want to be kicked off disability before I am ready.

QUESTION: *How do I know the NET dollar amount of income to report to SS each month?* Or should I instead be reporting gross each month and try to make them understand expenses at the end of the year by showing them my Schedule C tax return?*

That 2nd option sounds to risky to me! I think it would be misleading for me to report all gross income, because it would not include business expenses I can deduct, like buying a computer.

(PAYMENT NOTE: If this is too long of a question - I can make an additional payment. Just let me know! I will have a question about vocational training programs too, and that is definitely a different subject. I will be making payment for that when I figure out the exact questions I want to ask.)

I sincerely appreciate any info you can provide on monthly reporting of income. I have read a lot online but there is no solid answer.



Support Replied ~ 05-15-2011 16:06:28

Dear Carrie:
Social Security will go by the net for the year divided by 12. You should let them know that you are starting your own business and don't plan to go over the $12000 you are allowed to earn....Ask them how many hours you are allowed to work each week. (It might have changed since I was there) Your Extended Period of Eligibility started on the month after your 9th trial work period month....You were not ceased because you have not gone over the $1000 limit in any month since then. The extended period of eligibility can go on forever as long as you don't go over the SGA amount in any month.

Call SS and get the name and number of the person that will handle this work. It is important to know who to report to if there is a problem. Keep good records and ask the SS person if they want you to report every 6 months or so. Self-employment is tricky and you don't want to lose your benefits by not letting SS know whats going on.

Knowing who will handle this will also protect you if something gets reported wrong from IRS....Any report that you do for SS, take a photocopy for yourself. Good luck in your business venture.....Carol
Your Comment ~ 05-19-2011 14:41:27

Hi Carol,

Thank you for your explanation about starting a business on SSDI. I was afraid you'd say that! (that I have to go talk to them, if I do go through with starting this business). I will have to get my courage up and go talk to someone. I deposited another donation because I feel this is a lot of follow-up questions and i don't want to take advantage of someone providing a valuable service.

When I talk to someone at the offices, you said to ask about the number of hours allowed: Will they really tell me the number of hours I can work to stay below SGA? I have a feeling they will tell me "there is no set number." But maybe I am just being pessimistic.

Would you mind telling me what the number of hours per week or month was when you were there, just to give me some idea? Does it vary by profession?

Will they take "my word" for the number of hours i work? Since I'm a writer - at least I hope to be - I would have to estimate hours anyway. My other "talent" (haha) is making beaded jewelry so I may try that as a business - but again no real way to verify hours other than my estimate.

Will they cut off my benefits if I report one month more than $1000, even though I haven't yet subtracted my expenses because it is not tax time?

Will they automatically do a review of my case when they get the final earnings for the year?

Can't they decide I am doing SGA no matter what the details are as far as hours and earnings?

Would they ever let me see my "file" on computer or a paper copy?

Thanks so much, Carrie

Support Replied ~ 05-24-2011 22:23:12

Dear Carrie:
This business of yours sounds very small and probably won't net over $12000 which is the $1000 x 12. Since self employment goes mostly by the year, as long as you say that you are only working at this approximately 10 hours a week. Let them know that you are keeping a close watch on your hours and income, they cannot argue with that.

If you were a dentist, for example, you could earn maybe $500 an hour and that would bring you way over the monthly amount. But if you are selling home-made jewelry, the profit is very low and you would probably have to work many hours a week to net over $1000 in a month.. What you would have to fill out is an SSA-820 which is a self-employment work notice. On that form, state that you are intending to stay under SGA. If you do go over, you can do an expedited reinstatement and regain your benefits....It is a pain to lose them and then have to get the reinstatement so make sure you state on your 820 form that you do not want to lose your benefits. As long as you report what you are doing, SS should not be able to charge you with an overpayment. It is their job to help you with your work. You can get the form from SSA.GOV or call the toll free number. SS reviews disability cases on a diary date that gets posed on your record....Ask the toll free number if they know when your next reexam is.

I don't know what file you want to see...Your disability file is probably in Baltimore or if it is really old, could be destroyed. You can however, request to see the file and SS will recall it and then contact you to come to the office. If you want photocopies of any info, you should bring your own copy paper. If it was a long time ago, it might be destroyed. If it is really recent, it could be on a CD. If so, they will send you the copy.

I would not mention that you are a writer because unless you get any monies from being published, those hours you write might not be worth actual $. SS should take your word for what you are doing because it is in the form 820. Wait until you have done the work for at least 3 months so you have a little history to tell them about.

Remember, KEEP YOUR OWN COPIES of the forms that you send in....Also keep the name of the person (at SS) and the date that you talked to them so you can refer to them if needed. Your best defense to any action is accurate records. I tried calling you but there was no answer. Hope this helps you.....write back if you need to.....Carol
Your Comment ~ 05-25-2011 17:22:40

Hi Carol,

Thanks for trying to call me, but it isn't necessary. I usually have the phone off and use it just for emergency - to save money and also because my roommate is always here and I don't want anyone to know / overhear the details of my life. So I try to do everything personal by email :)

Thanks for telling me about the self-employed earnings form! They make these things so hard to find out about. In all my research on my own I never came across that info. Thanks for explaining some of the logic about hours and earnings.

What I am still trying to understand is the relation between number of hours worked and earnings - if I try the writing business. I found an editor is willing to help by giving me the less challenging writing assignments through her business. I have that in an email - as proof that they are 'accommodating" me by paying me the same as others, but giving me lighter work. So I think I will get some credit for that if I am ever on the edge of SGA, according to some online research I did.

I would earn about 12.00 per assignment, no matter how long it takes me to complete the work. In the course of a month, I might earn close to $1000 and I won't try to earn more - unless I have some idea I can support myself and end the disability payments. That would be an average of $250 per week or $50 per day.

Questions: Would it be ok to do 20 hours work per week? Or is that automatically considered SGA because it is above 10 hours?

Or do they figure it this way - if I work 20 hours and get $250 per week (which is about $1000 per month), it works out to $12.50 per hour. Is that too high of an hourly average wage? (Keep in mind I would not be paid hourly -that is just an average. These writing assignments are kind of like piecework. It comes out to be about 1 assignment per hour. Sometimes I might have to make corrections or re-write part of the assignment, so some would take longer to complete.)

I may in fact not be able to do 20 hours, but I was just using it as an estimate. Let me know what your take on this is!

I really appreciate your help, Carol. No one else offers this kind of help to people in my situation. It really relieves my mind to have an experienced person to explain some of the logic and some of the complicated rules. I will be a regular customer in future and I will recommend your service highly. Thanks so much, Carrie

Support Replied ~ 05-25-2011 18:03:37

Dear Carrie:
How is the editor paying you? I assume as a independent contractor. You will have to keep accurate records. At the end of each day, note how much you earned that day.
Don't so much count the hours, count the completed task that you are getting the $12 for. So at the end of the month, you can count how much money you earned...When you complete the 820, you can send in a calendar that shows how many $12 tasks that you did each day. If you average 3-4 a day, you should be ok. I think you can average the year out, so if you don't earn over $12000 net, you will be ok.

 If the jewelry makes you go over, then you should seriously consider if it is worth it. Remember, if you lose your disability, then you might lose your insurance and any other benefits you get from the city or state that you live in. Weigh all those options before you let yourself earn more than the amount allowed.....Sometimes that amount goes up with the cola at the beginning of the year....So beware to check if there is a new amount allowed next year. I hope this helps...Like I said keep a copy of what you send to SS for your records.....Hope your job goes well......Carol
Your Comment ~ 05-26-2011 22:09:56

Hi Carol,

You're right I will be paid as an independent contractor.

Not to worry, if this contractor job works out I will not try to do the jewelry-selling at the same time. It would be too hard to try to keep both things going at the same time anyway.
Just to clarify the proper way to report - So you're saying I should fill out form 820 take it in to an office? Will they send me another form 820 to fill out at year end when they get my tax info from IRS?

They sent me one of those forms 2 years ago when they were deciding if I used up my TWP - they decided that I did use it up, but at least they did not take away any benefits.

Just to clarify hours limitations - The form asks about hours, is 20 per week too much? Is that the reason you mentioned that I should focus on number of tasks per day, rather than hours, for the form? I am worried they will insist on knowing hours.

If, on the other hand, I state I work only 10 hours to earn about $1000 per month net, then if it was averaged out I would be earning $24 or so per hour. Would that be a reason to for SS to decide that I am doing SGA? Is $24 too much - I mean is there a magic amount that they consider to be automatically SGA? (You gave the dentist example.)

Question about the form - What is meant by "describe the management decisions you make in your work" on form 820? Does that apply to me if I have no one to manage but myself?

Thanks again so much! I will now stop plying you with questions on this subject. Take care, Carrie

Support Replied ~ 05-29-2011 00:23:44

Dear Carrie:
The 820 is just used to alert SS that you have started a business and what you are doing.....Since you do not have a set "Hour per Week" amount, you can explain in the remarks what you said to me.....That you plan to work and only earn what you are allowed in order to keep your SS. You know that you get $12 a task but you don't have to state that it takes you an hour to do the task. It is piece work. You will register how much you do every day in dollars. You can do about 80 tasks a month. As long as the monthly amount does not go over $999 (to be safe), You will be ok.

Some tasks will take you longer than an hour and means that on that task you will not be making $12 an hour. Like I said, don't make it too complicated. Tell them that you plan on earning less than say $990 a month and will not be going over the amount allowed in order to keep your benefits. If they want to know how much an hour you make, just tell them you will not know until after the month is over exactly how long each task took you. I don't think that 20 hours is too much. You are not a high wage earner so you are not able to earn $500 a hour.

On that management question, just say it is a very small business and you are the only one involved in decisions. (Remember that the form is used for all situations and you do not need to answer some of the questions because they simply don't apply to you). Again, good luck....Carol

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DISCLAIMER - You should consult with your local Social Security Office before acting upon any information received as a response to your question on "Social Security Advisor".

"Social Security Advisor" is intended to provide accurate and authoritative information with regard to the subject matter covered. It is offered with the understanding that neither the publisher nor the author is engaged in rendering legal, accounting, investment or other professional advice or services.

Information obtained from, including e-mail responses from "Social Security Advisor" should be considered as general educational information. You must never rely upon the advice given here. Your individual situation may not fit the generalizations discussed. Only your local Social Security office can evaluate your individual situation and give you advice.

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In the news: Read Carols comments in this Social Security article

Thank you so much. The amount of infomation you provided on our call went a long way in helping to resolve the issues I had with the social security rep I was working with.
Tom F. 10-15-2019

Thank you so much. You provide a fantastic service and I really appreciate all your help. The next time I have a question regarding Social Security I will go to you first and save myself a lot of time.
Carol J. 10-03-2019

Thanks for the straight forward answers. It would have save a lot of time if I knew about this site months ago.
Emily D. 09-22-2019

Great talking with you and thanks for the help. Things now seem to be going in the right direction.
Chris H. 09-22-2019

Hello, thank you so much for responding to my inquiry, I really did not expect to get an answer from you so quickly. Brought the information you sent to my social security office an the issue, i have been dealing with for months, was resolved in an hour.
Veda M. 09-02-2019

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