Work Incentives Wednesdays: Unincurred Business Expenses

Are you self-employed or have you been considering working for yourself?  Do you receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits? If so, Social Security's Work Incentives and the Ticket to Work program may be able to help you on your path to success.

During today's Work Incentives Seminar Event (WISE) webinar, we'll talk about self-employment goals and what Social Security supports may be available to you. Before you attend the webinar, continue reading to learn about a Work Incentive that may help self-employed people achieve financial independence.

Unincurred business expenses

Unincurred business expenses are non-monetary contributions made by others to your self-employment efforts at no cost to you. Unincurred business expenses only apply to people who receive SSDI.

For example, you may be interested in opening a graphic arts business and talk to your State Vocational Rehabilitation (VR) agency about your idea. Your State VR agency may be able to provide you with a computer to use for your business. The computer was provided at no cost to you, but would be considered a business expense had you paid for it.

Your graphic design business may do really well and you might need to bring on some additional help. If a family member works for your business without pay, this would also be considered an unincurred business expense.

Still unsure about what qualifies as an unincurred business expense? For an item to qualify, it must be an item or service that the IRS would allow as a legitimate business expense if you paid for it; and someone other than you must have paid for it. Another example of an unincurred business expense is when someone (a friend, relative or another professional) performs business-related tasks without pay.

How does Social Security count unincurred business expenses in your earnings from self-employment?

Once you start to work, Social Security will determine if you are engaging in substantial gainful activity (SGA), or earning enough income to affect your eligibility for disability benefits. Social Security will deduct the cost of the unincurred business expense, including unpaid help you receive, from your Net Earnings from Self-Employment (NESE) when they determine if you have worked at SGA levels. The formula for determining your NESE is gross receipts minus business expenses multiplied by .9235. Thus, only a portion of your net earnings are counted in determining your self-employment income.

Whether you receive SSI or SSDI, Social Security only counts NESE.

And, whether you receive SSDI or SSI, it is very important to report your earnings and hours of work every month when you are self-employed.

Ticket to Work and self-employment

Social Security's Ticket to Work program supports career development for people ages 18 through 64 who receive Social Security disability benefits (SSI or SSDI) and want to work.

The Ticket program is free and voluntary. It helps people with disabilities move toward financial independence and connects them with the services and support they need to succeed in the workforce. Self-employment is an option for people who would like to participate in the Ticket program.

To learn more about Work Incentives and other employment topics, subscribe to our blog and receive updates, including links to our monthly Work Incentives Wednesdays blog series.

Learn More

To learn more about the Ticket program, visit www.ssa.gov/work. You can also call the Ticket to Work Help Line at 866-968-7842 or 866-833-2967 (TTY) Monday through Friday, 8 a.m. to 8 p.m. ET. Ask a representative to send you a list of service providers or find providers on your own with the Ticket program Find Help tool.