Will Passive Income Affect My Social Security Disability Benefits?

When applying for Social Security disability benefits and after the Social Security Administration has determined that you are disabled and entitled to benefits, there are limits to how much you can earn.  If you exceed these limits, Social Security may determine that you are not disabled or that your disability has ended due to your work activity.  However, passive income – that is, income that does not come from your work activity – does not count toward these limits.  The two most common forms of passive income our Social Security disability lawyers in New York see are ownership of a rental home and income from investments.  Some people also receive income from a business that they previously owned.

For those who own a rental property, it is important that you do not perform any physical work on the rental properties.  We generally advise that you have an agent or manager for the property who will collect the rent and either perform or arrange for any repairs/maintenance work that is necessary.  This approach means that any income you receive is the result of your ownership of the property, and not due to any work that you performed for the tenant.

This “hands off” approach should also be applied to any investments you may have.  By turning your investments over to a stockbroker or money manager, your income will be solely the result of any capital appreciation, not the mental work done by picking and choosing stocks and other investment options.

What To Do If You Own Your Own Business

The most complicated situations arise when disabled individuals own their own businesses.  Generally, these businesses tend to be small and closely held – sometimes solely within a family.  This means that additional steps have to be taken to prove that any income realized from the business is truly passive.  You should make sure that the business is sold to someone qualified to run it and be prepared to show that you are not still running the business.  The contract of sale should include specific details about how and when payments will be made to you from the business, and what those payments represent.  If this is not possible, it may be best to dissolve the business in order to avoid any issues with Social Security.

Having a stream of passive income should not affect your claim for, or receipt of, Social Security disability benefits, as long as the income is truly passive.  That means that you must be prepared to show that the income you receive is not the result of work activity.  In order to do so, you should thoroughly document who is performing activities on your behalf, what their compensation is, and where your income is coming from.

If everything is properly documented, your passive income should not interfere with your receipt of Social Security disability benefits.  However, given the complex nature of these situations, you should consult with an attorney before making any decisions or taking any definitive actions.

If you are disabled and cannot work, contact the Law Offices of Pasternack Tilker Ziegler Walsh Stanton & Romano, LLP today by calling (800) 692-3717 or completing the online contact form.