When you first begin working for yourself while you're receiving Social Security disability benefits, Social Security gives you the chance to try to work or start a business without losing your benefits. You have a total of nine months to try starting a business or freelancing, during what's called a "trial work period" (TWP). During the TWP, you won't lose benefits regardless of how high your earnings are, as long as you report your work to the Social Security Administration (SSA) and you're still disabled.
The Social Security Administration (SSA) and the IRS consider you self-employed anytime you make money but aren't being paid by an employer. This means that doing handyman work, housecleaning, or gardening could be considered self-employment. Or, if you start providing services as a business or independent contractor, like doing medical billing, bookkeeping, consulting work, or blogging, you would also be self-employed.
Yes, though Social Security has special rules to determine if SSDI recipients who are self-employed are working too much to be considered disabled. Like regular employees, you can't do what the SSA calls "substantial gainful activity" (SGA), but what counts as SGA is different for self-employed people than for employees.
When you first apply for SSDI (or if you've been approved for SSDI and have been receiving benefits for under two years), Social Security will use the "three tests" to determine if you're working too much to be considered disabled. After you've received benefits for two years, Social Security apply a different test to see if your self-employment is SGA. For more information, see our article on being self-employed or starting a business while on SSDI.
Your trial work period starts when you begin to work for yourself and perform a "significant" amount of services. Social Security will find that your services are significant if you earn more than $1,050 (gross) per month or you work more than 80 hours in a month for your own business.
Your trial work period will last a total of nine months during a five-year period. The months don't have to be consecutive. Again, a month counts toward the nine-month TWP whenever you work over 80 hours in a month or earn more than $1,050 (in 2023) in a month.
During those nine months, you can make over the SGA amount ($1,470 in 2023) without having it affect your SSDI benefits. At the end of those nine months, if you're still working and Social Security decides that you're performing SGA, the agency will terminate your benefits.
Your Extended Period of Eligibility (EPE) begins the month after your TWP ends. If you don't have nine months that count as trial work, you aren't entitled to an EPE.
The Extended Period of Eligibility has two parts. The first 36 months of the EPE is called the "re-entitlement" period, where your small business or freelance activity might cause you to lose benefits for some months but not others.
If you run a small business or do freelance work during your re-entitlement period, your eligibility to receive a monthly SSDI check will be determined on a month-to-month basis. You'll get benefits for any month that your work activity is below the SGA level.
During these 36 months, to determine whether your work activity is considered SGA, Social Security will apply the "countable income test," as discussed in our article on starting a small business while on SSDI.
If your business activity is considered SGA in any month during the re-entitlement period, your benefits will be "ceased" (stopped). You're entitled to a three-month grace period though, so you will still get benefits for that month plus the next two months.
If your work activity falls below the SGA level again, your benefits will re-start without a new application. But after a benefits cessation during the re-entitlement period, Social Security will evaluate your work under the three tests (see above) to decide if your benefits can restart.
After your 36-month re-entitlement period has ended, your benefits will stop if your self-employment rises to the SGA level again. You will have to apply for disability benefits again if you stop working for yourself because of your disability. But if you become unable to continue your freelance or small business activity within five years of your benefits being stopped, you may be entitled to "expedited reinstatement" of your benefits.
For more information on the amount of self-employment work you can do, see our article on working for yourself while collecting Social Security disability benefits. For more information on the trial work period or EPE, see our article on starting to work while on SSDI.
Updated December 8, 2022