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.
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":
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.
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.
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.
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:
Unincurred business expenses technically also include the value of unpaid help, explained just above.
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:
Here are the only disability-related expenses that Amy can use to calculate her countable income:
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.
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.
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:
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.
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