Understanding How Self-Employment Income is Credited to Calendar Quarters for Social Security Disability Benefits, § 404.142

Introduction: Social Security Disability benefits provide vital financial support to individuals who are unable to work due to a disability. Eligibility for these benefits is based, in part, on a person’s work history and the number of “quarters of coverage” they have earned through paying Social Security taxes. Understanding how self-employment income is credited to calendar quarters is an important factor in determining eligibility for Social Security Disability benefits. This guide provides an overview of the process for crediting self-employment income to calendar quarters for taxable years beginning before 1978.

Crediting Self-Employment Income to Calendar Quarters: Under Section 404.142 of the Social Security Administration’s regulations, self-employment income earned before 1978 is credited to calendar quarters as follows:

• If the taxable year was a calendar year, the self-employment income is credited equally to each quarter of that calendar year.
• If the taxable year was not a calendar year, the self-employment income is credited equally to the calendar quarter in which the taxable year ended and to each of the next three or fewer preceding quarters that were wholly or partly in the taxable year.

For example, if a person had self-employment income of $10,000 in a taxable year that ended on June 30, 1975, the income would be credited equally to the second quarter of 1975 (April, May, and June) and the first, second, and third quarters of 1974.

Importance for Social Security Disability Benefits: The number of quarters of coverage a person has earned is a critical factor in determining eligibility for Social Security Disability benefits. A person generally needs 40 quarters of coverage to be eligible for these benefits. Crediting self-employment income to calendar quarters can help individuals who were self-employed before 1978 qualify for Social Security Disability benefits if they become disabled.

Conclusion: Understanding how self-employment income is credited to calendar quarters for Social Security Disability benefits can be a complex and confusing process. However, it is an important factor in determining eligibility for these benefits. If you have questions about how self-employment income is credited to calendar quarters or need assistance in determining your eligibility for Social Security Disability benefits, it is important to consult with an experienced attorney or Social Security representative.

https://www.ssa.gov/OP_Home/cfr20/404/404-0142.htm