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

You may be able to deduct money that you spend to be able to work, and the value of other services, from your self-employment income or wages.

By , Contributing Author
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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.

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

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

IRWEs, such as the cost of special transportation or work accommodations that you pay for, are costs that enable you to work. These costs can reduce your "countable income," which can help with your eligibility for Social Security Disability Insurance (SSDI) benefits or Supplemental Security Income (SSI) disability benefits. And for current SSI recipients, IRWEs can help lessen the amount by which your existing SSI payment will be lowered 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 work space if you already took them as business expense deductions to reduce your gross income.

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.

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 equipment that is 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, the 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.

Unincurred business expenses technically also include the value of unpaid help, 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 Can I Start a Small Business and Still Receive Social Security 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:

Amy owned a small floral business. She applied for SSDI after suffering a stroke that left her in a wheelchair with partial paralysis on her left side. Despite her condition, she continued to work about 20 hours per week in her business. After her regular business expenses were deducted, Amy's net earnings from her business were $2,500 per month.

Amy had some disability-related work expenses:

  • She could no longer take public transportation or drive, so she had to hire a specialty transportation service to get her to work. This service cost her $400 per month.
  • She also had to hire an assistant caregiver to help her dress and bathe in the morning. The assistant caregiver cost her $150 per week.
  • Her son helped out at the floral shop 20 hours per week and wasn't paid for his services. The value of his work was $200 per week.
  • Her daughter helped her in the evenings at home, for no charge.
  • She had her interior doors in her house widened and her countertops lowered for easier access. These changes cost about $2,000.

Here are the only disability-related expenses that Amy can use to calculate her countable income:

  • Unpaid help/unincurred business expenses: the value of her son's assistance ($800 per month), and
  • IRWE exclusions: the cost of the transportation services ($400 per month) and the cost of the assistant caregiver ($600 per month).

Because the help from Amy's daughter in the evenings doesn't directly enable her to work with her disabilities, the value of that unpaid help is not deductible. Also, because Amy doesn't work at home, the cost of having her interior doorways widened or her countertops lowered is not deductible.

Amy can deduct a total of $1,800 from Amy's net earnings, leaving her with $700 per month in countable income ($2,500 minus $1,800). The SSA will not consider her to be doing work at the SGA level (the monthly SGA amount in 2022 is $1,350 per month for someone with Amy's type of disability). As long as she meets the other income tests, Amy's work won't affect her eligibility for SSDI benefits.

How Expenses Are Deducted From Your Wages as an Employee

If you're employed by someone else, you are 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.

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 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 2022, the FBR is $841). 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:

Harry, an SSI recipient, is an employee who receives SSI benefits based on intellectual disability. His gross wages are $819 per month, which he earns working part-time at a local grocery store. He has no other income. Here are his expenses:

  • Harry's disability makes it difficult to use public transportation, so he takes a taxi to and from work. The taxi costs him $60 per week.
  • He receives free assistance with housekeeping and meals from a program that supports those with mentally disabilities to live independently. The value of this service is $150 per week.

Here is how the SSA would determine Harry's SSI payments: Harry's total IRWEs are $240 a month (the monthly cost of the taxis). The SSA doesn't count the value of the free in-home services as an unincurred business expense because Harry is not self-employed. (They also aren't considered income because they're provided by a state agency.)

Harry is also entitled to income "exclusions" in the amount of $367 (the first $20 of his income, plus the first $65 of his earned income and one-half of his remaining earned income). Harry's total excluded income, including the IRWEs and the income exclusions ($240 + $367), is $607. This leaves Harry with $212 in countable income ($819 minus $607). The difference between the FBR ($841) and his countable income ($212) is $629, which is what Harry will receive as his monthly SSI payment.

What If I Have More Questions?

If you are 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 March 7, 2022

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