Does Passive Income Affect Social Security Disability Benefits? Yes, it can, but generally, passive income does not usually impact your Social Security Disability Insurance (SSDI) benefits, as income-partners.net explains. Understanding the nuances of passive income, unearned income, and how the Social Security Administration (SSA) views them is crucial for anyone receiving or applying for SSDI, and partnering with knowledgeable financial and legal professionals can help you navigate these complexities. Explore income-partners.net for insights into financial planning, legal guidance, and strategic partnership opportunities.
1. What Are Social Security Disability Benefits?
Social Security Disability Benefits (SSDI) provide financial assistance to individuals who are unable to work due to a disability. To qualify for SSDI, the Social Security Administration (SSA) requires you to have a qualifying disability and a sufficient work history, demonstrating contributions to the Social Security system. If approved, you’ll receive monthly payments. However, the SSA sets limits on how much income you can earn while receiving SSDI. Earning above these limits can jeopardize your benefits, as the SSA may determine that you are no longer disabled due to your work activity.
It’s essential to understand that not all income is treated the same by the SSA. Some individuals receive income from sources that do not involve active work, known as passive income.
2. What is Passive Income?
Passive income is earnings derived from an activity in which you do not materially participate. This income requires minimal effort to earn and maintain. The IRS (Internal Revenue Service) and other government agencies view passive income differently from earned income.
Examples of passive income include:
- Rental income from properties where you do not actively manage the property.
- Royalties from intellectual property, such as books or music.
- Earnings from a business where you are an owner but do not actively participate.
- Income from limited partnerships where you are not actively involved in the business operations.
Understanding the distinction between active and passive income is crucial when assessing its potential impact on your SSDI benefits.
