The Social Security Administration (SSA) keeps records on the earnings of every American. The agency does this each year, and maintains long-term records of an applicant’s income history (with year-to-year comparison). The agency also analyzes the portion of your income that is subject to social security taxes, and uses that amount to calculate the amount of benefits you will be eligible for at the time of your retirement.
The more income you earn while working, the more money that will be paid into the SSA system via taxes. Higher contributions will result in a higher monthly benefit to you upon retirement (up to a maximum amount). In 2021, this maximum amount was just under $4000 a month, and in 2022, this has been increased to $4194 a month. The application process for social security disability insurance (SSDI) can be complex, and many people find the assistance from a social security lawyer helpful in navigating the administrative barriers. There is a provision in the disability program that provides funds to cover legal services, and better assist people suffering with disabilities.
Due to the fact that passive income is defined by the SSA as money that is not related to an applicant’s primary work, most types of passive income will not be factored in when the SSA determines eligibility. Nor will they be taken into account when determining your monthly SSDI benefit. It’s recommendable to discuss with your social security lawyer, and err on the side of caution rather than take a hands-off approach. For example, if you’ve invested in a rental property, it would be prudent to hire management and maintenance people to take care of the property. This way, the SSA may classify such income as passive because you are not putting as much effort into it as you would put into your main job.
The SSA defined three primary earning activities that would be considered ‘passive’ in regards to disability insurance benefits. The first includes profits from ownership of property such as real estate investments or income from rental units. The second includes business activities that earn you money, however, you do not actively participate in these activities. The third includes royalty payments that are made to you via any intellectual property deals that you have formed in the past. If there is any confusion in regards to whether your income is passive or not, it would be a good question for your social security lawyer.
It is important to note that if you plan to work during your retirement, and also collect Social Security benefits, there is a good chance that some of your benefits will be withheld. Whether some of your benefits are withheld will depend on the amount of income you earn.
if you have an SSDI benefit and are concerned that your monthly benefit may decrease due to passive income, it is best to seek out legal advice from a competent Social Security Lawyer to ensure your disability payments are protected, and your application is submitted correctly. Need help locating a social security lawyer near you? Get assistance quickly with a free case evaluation.
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