Trial Work Period: Know Yours - Part 2
What you should know about:
the Trial Work Period
(both before AND after you win your SSDIB claim)
Note: This article is for general information only and is not legal advice to any particular reader or individual. For legal advice, you must specifically retain a lawyer.
When is a month of work a “service month” of a TWP?
As we discussed in the TWP blog, Part 1, your Trial Work Period starts the first month you work a “service month” requires that you perform a sufficient amount of services to hit the TWP threshold. Services includes any activity (even criminal activity) which is done:
A) in employment as an employee (think, W2 recipient at tax time) or
B) self-employment (think, 1099 recipient at tax time and those that provide services or products but don’t receive a 1099 from the entity you are doing the service for)
2. for pay or profit, (this could be paycheck, cash or in-kind pay) or is the kind normally done for pay or profit.
SSA tells us that if work is done, without pay or profit, and it is done for therapy purposes or training, or is typical chores around the home or in self-care, is will generally not consider it a services for TWP purposes. But, beware, of course, of services done solely for volunteer purposes, as most of them could trigger a service month.
Whether providing services that amount to a service month often depends on whether one is an employee of another (W2) or is self-employed (aka contractor, free-lancer, gigger, business owner).
In employment situations, work may be a service month only if the activity “is actually or usually performed for remuneration or profit.” POMS DI 13010.060B1. There is an SSA-provided table showing what gross earnings in any given month would constitute a service month, and this annually updated figure typically increases every year. POMS DI 13010.060.
However, TWP threshold amount is less than SGA. So, if you are safely working at less than SGA, you can still be using up TWP months. In 2021, TWP service month is $940 while the SGA level is $1310.
Work activity for self-employed people ((1099 and Schedule C’ers) is calculated differently than for that of the employed by others (W2’ers). There are two ways in which you will meet a TWP servicer month: Net earnings or hours of work activity.
1. The first is whether your net earnings (after business expenses) in a particular month are more than the TWP service month amount for a particular month. This may generally be found on your Schedule C tax reporting, as that determines the net earnings after business expenses are substracted from gross earnings. Gross revenues, from sales, would typically not be the same as net earnings, since gross revenues is before the expenses used to generate them are subtracted out.
Again, the TWP amount for 2021 is $940, and generally increases most years. Know it every year and plan accordingly.
2. The second way is based on hours of work activity, regardless of net earnings. POMS DI 13010.060B3. Currently and for decades now, 80 hours constitutes a service month. POMS DI 13010.060A. So, if you don’t want a service month, and are self-employed, don’t work more than 80 hours a month. Document your time. If you are a 1099’er because you work on a contract for your “client” who you may consider like an employer, and you get paid for each hour, steer clear of 80. Beware of last minute overtime or picking up shifts or hours. If you are a self-employed/business owner or gigger, track those hours and perhaps don’t include truly non-working daydreaming hours in your ‘work schedule’ – at least not as services.
OK, so now that we know that working may spark up and end our TWP, what happens if and when it starts and then ends? Why is this important to you?
[Side note: It is very important to note that otherwise pertinent work incentive rules (a blog for another day), such as IRWEs, employer subsidies, accommodations, unsuccessful work attempts, averaging of earnings*, and others do not come into play during the TWP. POMS DI 13010.035F. However, they can come into play to bring down otherwise ‘earned income’ that is over SGA, to under SGA, after your TWP is over. So very important to learn about them IF you are working part time during your period of disability. This is a topic for another blog, coming soon. *I currently have a case where the issue of averaging of earnings during TWP is being reviewed in a hearing regarding an Overpayment the claimant allegedly had over 10 years ago (yes, this stuff is not to be treated lightly! A six figure overpayment debt is not fun.] One part of the SSA ruled as above, that averaging of earning is not allowed during TWP to determine service month level of income. However, an appeal level within the SSA stated rather cryptically, that it can in areas of self-employment. I do not know where those chips will fall and it doesn’t effect my case much, possibly. But, a distinction may need to be made about averaging of revenue and averaging of expenses (that are not received or paid out on a schedule, and cover broad periods of time) versus the overall averaging of earnings or net earnings. We shall see!
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