To simplify self-employment determinations for Aged, Blind, and Disabled (ABD) cases, the process is divided into identifying the employment type and handling specific income categories like capital gains.
Identifying Self-Employment
The first step for an eligibility worker is to determine if an employer/employee relationship exists or if the client is an independent contractor.
- Is it Self-Employment?
A person is considered self-employed if they:
- File (or are eligible to file) taxes as self-employed.
- Declare themselves to be self-employed.
- Are identified as an independent contractor by the parent company.
- Employee vs. Independent Contractor
If the relationship is unclear, use this checklist:
| Feature | Employer/Employee Relationship | Independent Contractor |
| Schedule | Has an established work schedule. | Sets own schedule/methods. |
| Wages | Receives specified wages | Paid for specific results/tasks. |
| Taxes | Employer withholds FICA/income taxes | Responsible for own taxes |
| Instructions | Receives extensive “how-to” instructions | Told what to do, not how |
| Benefits | Receives benefits (insurance, leave). | Does not typically receive benefits. |
Business Types
Workers must identify which business structure the client uses to determine how to process income:
- Sole Proprietorship: An unincorporated business owned by one person. The business has no existence apart from the owner, and all liabilities are personal.
- Partnership: Two or more persons carrying on a business together. The partnership itself is not taxed; instead, each partner reports their share of profit or loss on their own tax return.
- S-Corporation: A corporation that avoids double taxation by passing income through to shareholders. Shareholders report their share of the corporation’s income and deductions on their personal returns.
Important ABD Income Rules
- SSI Recipients: Always follow the SDX. Count the income SSI counted and apply the deductions SSI gave to that income.
- Capital Gains: For ABD benefits, capital gains are treated as changing a resource from one form to another, not as income.
Action: If capital gains are counted for other programs (like SNAP), you must divert them, so they are not counted for ABD-related benefits.
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