Self-employed people in Tennessee who become disabled and are unable to return to work may be eligible for Social Security disability benefits as long as they have paid self-employment taxes and have earned enough work credits. To be eligible, self-employed people must also medically qualify for disability benefits and they must not be performing a substantial gainful activity. SSDI benefits can help disabled people to pay for their day-to-day needs while they are unable to work.
Eligibility for SSDI Benefits
People who work for employers pay Social Security taxes out of their paychecks. This money is paid into the Social Security fund and is used to pay retirement and disability benefits. To be eligible for SSDI, workers must have severe disabilities that are expected to last at least one year or to result in their deaths. They must also be unable to complete any substantial gainful activity. Workers must earn enough work credits to be eligible for SSDI benefits in addition to the medical qualifications.
While self-employed people do not pay Social Security taxes out of paychecks, they do pay these taxes when they pay their quarterly and annual income tax forms. The self-employment tax includes amounts for Social Security and Medicare, which means most self-employed people will be eligible for SSDI as long as they have earned enough work credits and have qualifying medical conditions.
How Work Credits Are Calculated
The number of work credits that people need to be eligible for SSDI depends on their ages and the number of years that they have worked. Self-employed people receive a credit for every $1,360 that they earn in a year and on which they pay Social Security taxes. The credits are based on the net profits that are made because that is what the taxes are paid on. The maximum amount of work credits that can be earned per year is four whether people are self-employed or are employed by others.
When Business Owners Might Not Be Eligible
Some business owners may not be eligible for SSDI benefits. Business owners who structure their companies as S corporations are not required to pay self-employment taxes. Because they do not pay Social Security and Medicare taxes, they don’t earn credits. However, business owners may earn credits by working at other jobs.