When evaluating for SGA, consider the following factors:

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  Did the earnings represent the person’s own productivity?

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  How many hours did the person work, and what was their rate of pay?

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  Was employer subsidy, or impairment-related work expenses involved?

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  Was there a special employment situation such as government-sponsored programs, foreign work, or sheltered employment?

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  Was the person in the military?

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  Did the person receive pay for non-work (sick and vacation pay, holiday pay, or any bonuses, etc.)?

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  Did the countable earnings exceed the SGA threshold?

See Also:

DI 10505.010 Determining Countable Earnings

DI 10520.001 Impairment-Related Work Expenses (IRWE)

DI 10505.025 Special Employment Situations

DI 10505.023 Military Service

DI 10505.010C Policy — sick and vacation pay

DI 10501.015 Tables of SGA Earnings Guidelines and Effective Dates Based on Year of Work Activity

After considering SGA factors, determine the:

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  gross monthly earnings,

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  the months that the person performed work activity, and then

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  calculate the countable earnings.

To assist you in the SGA determination evaluate all information (including information obtained on the work activity report (e.g., SSA-821-BK (Work Activity Report-Employee).

IMPORTANT: If you receive information that the person may be engaging in SGA (despite low earnings), or is in a position to defer or suppress earnings, follow the evaluation guides in DI 10505.020C.

See Also:

DI 10505.015 Averaging Countable Earnings

Gross earnings are a person’s total earnings for work activity before the deduction of taxes or other withholdings. Total earnings may also include in-kind payments that we may not count as “wages” for FICA tax and benefit purposes. Payments in-kind are employer-paid non-monetary payments, such as room and board or free rent. Count payments in-kind in an SGA determination if they are paid based on the employee’s own productivity.

To determine gross earnings:

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  Develop enough evidence to determine the actual period worked and the earnings for that period. Note that we count earnings for title II beneficiaries when earned, and for title XVI, we count earnings when paid.

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  Compare the evidence received with the person’s statement to confirm the information on the SSA-821-BK accurately reflects earnings.

NOTE: Information on developing and verifying gross earnings is in section DI 10505.005.

Social Security Act §210 defines certain persons as employees, who we would normally consider as independent contractors (i.e., self-employed) under the common-law rules for determining employer-employee relationships. There are four categories of statutory employees:

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  Agent drivers or commission drivers, see RS 02101.300B;

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  Certain full-time life insurance salespeople, see RS 02101.355;

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  Full-time traveling or city salespeople, see RS 02101.300B; and

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  Home-workers, see RS 02101.300B.

The employer provides statutory employees a W-2 tax form with the amount of Social Security wages in box 3. Review the W-2 following these guidelines:

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  If we consider a person as a statutory employee, the employer should have checked the “statutory employee” block on the W-2 to indicate their status.

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  When filing tax returns, the statutory employee may be able to deduct trade or business expenses from the wages shown on the W-2 by filing a Schedule C or C-EZ. However, we use the Social Security wages (reported on the W-2) as the gross income for SGA purposes.

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  Do not deduct the business expenses from the gross wages when determining countable income, unless you can consider any of the expenses as IRWE.

After obtaining a person’s gross earnings, following these guidelines to determine countable earnings:

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  Deduct the amount of any subsidized earnings provided by the employer, and any approved IRWE--you do not have to develop for subsidy or IRWE when monthly gross earnings are under the SGA limit, and you do not have evidence that the earnings are understated.

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  Take into consideration, and if appropriate, deduct sick or vacation pay and bonus and incentive payments.

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  Do not deduct from gross earnings standard payroll deductions such as Federal and State withholding taxes, insurance premiums, Federal Insurance Contributions Act taxes, pension payments, union dues, etc. These amounts are not deductible because they are attributable to a person's work activity.

For detailed information on applying work incentives to determine countable earnings, see DI 10505.010.

For title II, you may be able to determine if a person has engaged in SGA without having to determine the exact monthly countable earnings if:

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  a person alleges working at levels that are clearly above the SGA level, there is no reason to question the accuracy of their statements, and the evidence is clear that alleged deductions for employment supports (IRWE, subsidy, or special conditions) would not reduce the gross earnings below the SGA threshold level; or

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  the evidence is clear that the person’s monthly earnings are clearly not SGA, and you do not have evidence that they may actually be engaging in SGA, or is in the position to defer or suppress earnings.

See Also:

DI 10501.015 Tables of SGA Earnings Guidelines and Effective Dates Based on Year of Work Activity

DI 10501.025 Clearly Not SGA

NOTE: Different rules apply to persons entitled to title XVI. For information on computing income in title XVI cases, see SI 00810.300.