TN 23 (11-23)

RS 02505.065 Meaning Of Substantial Services (SS) in Self-Employment (SE)


In a grace year, it is significant whether a person renders SS in SE in order to determine benefits payable under the monthly earnings test (RS 02501.030).


1. When Services Are Substantial

The general test of whether services are substantial is whether, in view of the services rendered and other related facts, a person can be considered retired in a particular month.

Specifically, in the absence of evidence to the contrary, a person renders SS in SE in a month in which they devote:

  1. a. 

    more than 45 hours to the business, or

  2. b. 

    between 15 through 45 hours to a business in a highly skilled occupation.

Where the time devoted to the business is less than 15 hours a month, the services are not substantial.

Where a person works from 15 through 45 hours in a month and it is established that the services are not substantial, there are no SS in SE.

2. When Services Of More Than 45 Hours A Month In A Business Are Not Substantial

In spite of the time devoted to business, services are not substantial if:

  1. a. 

    the person's monthly earnings are readily determinable (e.g. personal service type SE involving no significant investment), and

  2. b. 

    the person's gross earnings, figured on a time basis, for services in a month are equal to or less than the monthly exempt amount, and

  3. c. 

    there is no evidence to the contrary.

This exception to the 45-hour rule has limited application since in most SE, the monthly earnings are not readily determinable.


In determining whether a person rendered SS in SE, consider each month separately. Although months may be grouped where a person's activities over a series of months are substantially uniform, the determination must be valid for each month to which it relates.


1. Services Of More Than 45 Hours Per Month Not Substantial

Example 1:

A minister retires from a large church. They accept appointment to a small church for monthly income which is equal to or less than the monthly exempt amount (including the value of parsonage they receive). Considering that the earnings do not exceed the monthly exempt amount, it would be reasonable to find that the services are not substantial even though the time they devote to their ministry exceeds 45 hours in a calendar month.

Example 2:

An individual worked as an employee January through April and became entitled in May. They again work as an employee in November and December and the monthly earnings test applies to these months. They state they were self-employed from June through September and furnishes a contract with a company stating the services, they, as a self-employed individual, were to provide as a grounds keeper. The contract calls for payment on an hourly basis. Development shows the beneficiary was validly self-employed. In each of the months June through September they rendered over 45 hours of service, but, because of the modest hourly fee paid for their services they earned less than the monthly test amount in each of the months. Based on the contract, their monthly earnings could be readily determined since they were paid an hourly rate and their earnings depended solely on their personal services. They had no significant investment in a “business.” Therefore, it was determined that work deductions would not apply for June through September even though they exceeded 45 hours of service in each of the months.

2. Services From 15 Through 45 Hours A Month That Are Substantial

The beneficiary devotes 15 hours or more per month to managing a large business or engages in a highly skilled occupation. In such cases, the services could be considered substantial. See illustration in SSR 71-13c re experienced engineer who, as a member of the board of directors of a loan association, inspected properties for a high fee but worked less than 45 hours per month. Court determined services were substantial.

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RS 02505.065 - Meaning Of Substantial Services (SS) in Self-Employment (SE) - 11/14/2023
Batch run: 11/14/2023