The Importance of a Correct Earnings Record

A few weeks ago, I conducted a Social Security disability hearing in which the medical proof supported a finding for disability pursuant to the Social Security Guidelines.  Unfortunately, the claimant’s earnings records, which were made a part of the record the morning of the hearing, indicated that the claimant earned well above the “substantial gainful activity” and disqualified him for benefits.

Having an incorrect earnings record can harm the case in many ways.  In Title II (SDS) cases, the claimant needs to be “insured” (have sufficient quarters of coverage from earnings) in order to be eligible to collect disability insurance.  If a claimant’s earnings records do not accurately reflect all of their earnings, they may not be considered insured and therefore lose benefits that they have earned.

Social Security Disability

Disability Evaluation

In both SSI and Title II cases, the issue of earnings arises at the first step of the disability evaluation.  The Administrative Law Judge is required to determine if the claimant is working and if so, to determine whether it is substantial gainful activity.  In 2014 substantial gainful activity was equivalent to earnings of $1,070.00 a month.  It is not uncommon in a Social Security disability case for the claimant to stop working, but then again resume working at fewer hours.  If the person earns above the” substantial gainful activity” level, he or she is not considered disabled.  The Administrative Law Judge will look at the earnings records to make this determination.

The earnings records also comes up at the third step in a disability evaluation when the Administrative Law Judge is trying to determine what kind of work the claimant performed in the past.  The Administrative Law Judge will look back at the last 15 years.  Over the years there have been cases in which employment was listed that the claimant did not perform or  employment was not listed that the claimant had performed.

Obtaining Your Earnings Record

It is in the best interest of all Social Security Disability applicants to obtain their earnings record and check it.  The first step is to go online and set up “My Social Security”.  After creating this account, the claimant is able to obtain an online earnings record.  This will not be a detailed record, but it does show the years of employment and check to see if the amounts listed are correct.  There is no charge to obtain this record online.  If a more detailed earnings statement is necessary, it is necessary to complete SSA Form 750-F4.  It costs $102.00 for this information.  Often a claimant’s Social Security Lawyer will not see earnings information in the record until a few weeks before the hearing if then.  There have been instances where the Judge orders a new report to be run during the hearing.  By then it is too late if there are errors in the record.

With Social Security’s expanded online access, it is now possible to check online and obtain at least the basic information.  The earnings record is one of the most important components of a Social Security disability case and correct information is essential for adequate preparation and favorable decisions.

The Necessity of Non‑Medical Evidence

There is no question that medical evidence is the most important component of a Social Security disability claim, however, non‑medical evidence can play an important role and can persuade an administrative law judge that the claimant is unable to perform and complete for employment.

Often medical records do not contain a complete picture of an individual’s ability to work.  Unfortunately, it is getting more and more difficult to persuade medical doctors to complete functional and mental residual capacity forms. Even if the claimant is able to obtain Residual Functional Capacity evaluation from a medical doctor, other evidence is still useful.   One type of evidence that is important are work records.  These records could show a pattern of absences due to the medical condition or they may show that the claimant tried to stay employed with a series of jobs that were progressively less demanding.

Testimony from co‑workers and supervisors may also assist in proving a claimant’s inability to perform the requirements of the job.  It is important to show that the claimant is applying for disability only because they are unable to perform the requirements of their past employment or any other employment.  In addition to work records, it is also helpful to obtain statements from family members, neighbors, or friends who are familiar with the claimant’s condition and the limitations that it causes.

The Importance of Filing Tax Returns

Failing to file a tax return can prevent the consumer from being able to discharge the debt if they ever seek bankruptcy relief.  As a general rule, taxes that are due 3 years or less from the date the bankruptcy petition is filed are not dischargeable and will still be owed once the individual receives the discharge.  But the return has to have been filed at least 2 years before the bankruptcy case is filed.  The return can even be filed late as long as the 2 years have passed.  And that’s a good reason to file tax returns as soon as possible.  If it’s ever necessary to file bankruptcy, it will be very helpful if those returns were filed at least 2 years ago.

However, if an individual doesn’t file a tax return when it is due and the IRS sees income on a W-2 or 1099, the IRS can estimate the amount of tax they think is owed by preparing a Substitute For Return.  Once the IRS estimates the tax they think you owe on their Substitute For Return, they will send a deficiency notice.

The consumer can then file the real return and will probably owe considerably less than estimated.  But, for bankruptcy purposes, the IRS Substitute For Return does not qualify as a return for that 2-year rule.  Even worse, some bankruptcy courts have held that any return filed by a taxpayer after the IRS has prepared a Substitute For Return does not qualify as a return for bankruptcy purposes.  That means that once the IRS prepares a Substitute For Return for a specific year, it will never be discharged in bankruptcy court. For these reasons ,it is important to  file tax returns even if the consumer owes and cannot pay it.


Working Part Time While Receiving Social Security Disability Benefits

It is possible to work part time and not lose disability benefits.  However, it depends largely on how much you earn and what type of disability benefits you are receiving.  If you are receiving Supplemental Security Income (SSI) and you begin work, the Social Security Administration will reduce your benefits by $1.00 for every $2.00 you earn after the first $65.00.  This means that you could earn so much working part time that the SSI benefits will terminate.  But unless your benefits have stopped because of your earnings for an entire year, the Social Security Administration will start up your SSI benefits again if your earnings decrease.  After a year of receiving no benefits it will be necessary to apply again.

Substantial Gainful Activity

Memphis Substantial Gainful Activity | Atty John E. Dunlap, PCIf you are receiving Social Security disability benefits (SSDI) and your earnings are below what the Social Security Administration calls the “substantial gainful activity” amount your benefits will neither stop or be reduced because of earnings.  That is, you can continue to get your full disability benefits while you work part time.  It is also possible to earn more than the “substantial gainful activity” amount and still receive your full benefits during the nine-month trial work period.

You can earn up to the “substantial gainful activity” amount and still keep your full Social Security disability benefits.  The substantial gainful activity amount is an absolute cut off point if your earnings average more than the substantial gainful activity amount, even $1.00 more, the Social Security disability benefits will stop after you have used up your nine-month trial work period no matter how disabled you are from a medical standpoint.

Trial Work Period Services

If you are going to work part time and you want to avoid problems keeping your benefits period, it is best to keep your income below the substantial gainful activity amount.  In fact, because there are advantages to keeping your income below what the Social Security Administration calls the “trial work period services” amount which in 2014 was $820.00 per month, this is what is recommended if you are receiving Social Security disability benefits.  This way you would not use up your trial work period months; you can save them for later use if you ever decide to go back to work on a full time basis.  If your claim is SSI, the trial work period rules do not apply.  For those people already receiving SSI benefits, the substantial gainful activity amount rules do not apply either.

It is best not to use up trial work periods until you are ready to return to work on a full time basis because the trial work period can be valuable, we recommend that you do not waste it on part time work.  To keep from wasting the trial work period, you need to keep your monthly income below the trial work period service amount.

The trial work period rules allow you to earn any amount of money for nine months and still receive full disability benefits. This allows you to attempt to return to full time employment without losing your disability benefits. If you determine you can not work on a full time basis and stop working prior to the nine month period, your benefits will not be terminated.

Memphis Substantial Gainful Activity | Atty John E. Dunlap, PCUnfortunately, many people use up their trial work period months by working part- time. I have had some clients who worked part time while their claims are pending and used up their trial work period before being adjudged disabled. If your income exceeds the trial work period monthly amount for nine months at any time since you applied for benefits, you will have used up the trial work period. This is true even if the months are not consecutive. Once you use up the nine month trial period, it is gone.

The Social Security Administration counts gross income, not take home pay. There are no deductions that can be taken against your gross income to reduce it below the trial work period monthly amount.

Reporting to the Social Security Administration

If you begin any work, you must report it to the Social Security Administration immediately. But it is not clear when you must provide proof of earnings. This seems to vary from office to office. When reporting employment to the Social Security Administration, ask when you are required to income documentation. Be sure to keep all documents provided to you and get the name of the person you speak with. Make it clear that you are receiving disability benefits, not retirement because the rules are different.