Deducting Disability-Related Expenses From Your Countable Income for SSDI or SSI

The Social Security Administration (SSA) pays benefits to people who can't work full-time because of a physical or mental disability. But people who are able to do a little work may still be eligible for disability benefits. When deciding whether you're making too much money to qualify for disability benefits, the SSA will let you subtract disability-related expenses that allow you to work.

First, we'll discuss how you would deduct expenses from self-employment income, and next, we'll discuss how you would deduct expenses if you're an employee.

How to Deduct Work-Related Expenses From Your Self-Employment Income

If you run your business or work for yourself, the SSA will deduct the following items from your net income (after your normal business expenses are paid) to calculate your "countable income":

• "impairment-related work expenses"
• "unincurred" business expenses paid by someone else or by an agency, and
• the value of any significant, unpaid help from your spouse, children, or other people.

The SSA will deduct these three types of expenses for anyone who runs a business, provides services, freelances, consults, or makes money from a farm or rental properties. Let's discuss each type of expense.

Impairment-Related Work Expenses

Impairment-related work expenses (IRWEs), such as the cost of special transportation or work accommodations that you pay for, are costs that make it possible for you to work. These costs can reduce your "countable income"—the income that matters when Social Security is deciding whether you qualify for Social Security Disability Insurance (SSDI) benefits or Supplemental Security Income (SSI) disability benefits.

Havings IRWEs can help you qualify for benefits. And for current SSI recipients, IRWEs can help lessen the amount that SSA will deduct from your existing SSI payment because of your income.

To find out exactly what expenses can count as IRWEs, see our article on what counts as an impairment-related expense.

Note that, if you work at home, you can't deduct as IRWEs the cost for changes you make to accommodate your at-home workspace—if you already took them as business expense deductions to reduce your gross income.

Unincurred Business Expenses

Unlike IRWEs, unincurred business expenses are the costs of items or services that are paid for by someone else. Examples of unincurred business expenses include office space or a computer or other equipment that's provided to you free of charge by an agency (like your state's department of vocational rehabilitation).

To be counted as an unincurred business expense, an item or service must be:

• one that the IRS would let you deduct as a legitimate business expense, and
• given to you free of charge.

Unpaid Help

If a family member or friend helps with your business without any pay, the SSA will deduct the value of this unpaid help when determining your countable income. Examples include your spouse doing the company's bookkeeping for free or a friend helping you unload shipments and restock shelves without being paid.

Technically, the value of unpaid help is another type of unincurred business expense, explained just above.

Substantial Gainful Activity for the Self-Employed

When you freelance or run a business, the SSA will assess whether the work you do is substantial gainful activity (SGA). If it is, the SSA will deny you SSDI or SSI disability benefits—or stop your SSDI payments, if you've already been approved.

To assess whether you're doing SGA, the SSA will use tests that involve your countable income. (If you've been receiving SSDI for less than 24 months, your countable income is just one factor in determining whether your self-employment is SGA.) You can learn more about the self-employment income tests by reading our article on starting a small business while receiving disability benefits.)

Here's an example of how the SSA will treat unpaid help, IRWEs, and unincurred business expenses for someone applying for SSDI benefits:

How Expenses Are Deducted From Your Wages as an Employee

If you're employed by someone else, you're an employee. The SSA allows employees to deduct IRWEs from their gross earnings to determine their countable income, but, employees cannot deduct unincurred business expenses (see above).

The SSA also recognizes that employers may "subsidize" the earnings of disabled employees, which results in the employees being paid more than the reasonable value of the actual services they perform.

For example, when employees receive an unusual amount of help or supervision to do a job, the SSA may consider this a "subsidy" since the employees are not fully earning the amount they're being paid.

The SSA can deduct a subsidy from an employee's earnings if you let the agency know about it.

How Disability-Related Expenses Affect Current SSI Recipients

When you're first applying for SSI, the SSA will determine whether you're performing SGA. And as discussed above, you can subtract certain disability-related expenses (IRWEs) from your income to qualify for SSI (depending on whether you are an employee or self-employed).

Once you're approved for SSI, however, the SSA no longer considers SGA when determining your eligibility for benefits. But if you work, your earnings can lower your monthly benefit amount. This is because your payment amount is the difference between your "countable income" and the "federal benefit rate," or FBR (for 2024, the FBR is $943).

Money that you're allowed to subtract from your earnings because of IRWEs can help reduce the impact of your income. (In addition to IRWEs, the SSA also provides other earned income exclusions. For more information on how SSI benefits are calculated, read our article on How Much Can You Receive in SSI Disability.)

Here's an example of how an SSI recipient's benefit amount would be impacted by IRWE exclusions:

What If I Have More Questions?

If you're already getting benefits, contact the SSA for more information about whether you have any disability-related work expenses. It may also be helpful to talk with an experienced disability attorney or advocate to see how your work could affect your eligibility for benefits.

_{Updated January 11, 2024}