Earning Income Without Working

Robin Mead

If you are earning money while applying for disability, Social Security may consider that you are working and not disabled.

If this is not true, it is important to let them know. For example, if you are out on medical leave and not performing actual work.

Please be careful if you have your name on a business or collect income from a business where you do not actually work. This can cause a lot of problems and headaches. For example, if you and your spouse own a business together, but you no longer perform actual work there.

The simplest thing to do is: Don’t keep your name on a business that you are no longer a part of. If this is not possible, collect as much written documentation as you can to demonstrate that you are not performing work in the business, and you are only collecting passive income.

For example, if your business is renting out a house, it will help to have documentation that you have hired a property management company that is handling all the tenant and rental issues and you do nothing but collect a check.

If you are applying for SSDI, unearned income will not matter, as long as you can prove that it is not “work.” If you are applying for SSI, unearned income will cause your check to go down.

Note On Royalties:

Social Security considers royalties to be earned income in some cases: https://secure.ssa.gov/poms.nsf/lnx/0500820450

5 thoughts on “Earning Income Without Working”

  1. After I officially stopped teaching in June I got an LLC and sold printables and Tshirts (that are made and shipped by a 3rd party) on Etsy. I make about $700 all year. I just filed SSDI and they want further information about my Etsy earnings. I have had to shut the whole thing down because it was just getting to be too much. It was increasing my fatigue even though it was mostly passive. I’m not sure how to address this with SS. Any suggestions? I think at this point they are asking for “additional information about when your disability impacted self employment”


  2. When I inquired about receiving royalties I was told that if you’re collecting SSDI that it doesn’t count against you. It should be considered “Passive Income” because I’m not actually performing work. However when I filed the 1099 on the royalties received social security administration considered that income as me working and now I’m in overpayment and my monetary benefit stopped. When I went in to apply for a payment plan on the overpayment, the representative was like hold up, I shouldn’t have to pay back or have my payments stopped because royalties aren’t supposed to count. Well, long story short, they said because it was a substantial amount that they considered it working and I was still responsible for the overpayment.


    1. This is the policy on royalties. It appears to me that it does count as earned income. I think it might be worth appealing this decision given the circumstances.

      It’s possible a judge might waive an overpayment fee since you weren’t performing work activities (usually overpayment appeals are denied at first but if one continues appealing and gets to a judge they are sometimes successful).

      ssa policy:

      overpayment appeals:

      I have also heard that sometimes a person will work with a special needs planning lawyer to create a trust and place the work inside the trust, so the trust earns the royalty not the person… I’m not sure how/if that works, but you could try meeting with a lawyer if you want to explore it.


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