Ask Larry

Do royalties Affect Social Security Disability Benefits?

Hi. Possibly, but probably not if the work that was done to produce the royalties was performed prior to your Social Security disability onset date. For example, say that a person wrote and sold a book to a publisher prior to becoming disabled. Assuming that the author isn't actively involved in promoting or selling the book at any point after his or her disability began, royalties received after that time could be excluded from counting as earnings Social Security disability benefit purposes.

Regardless of your circumstances, though, if you receive royalties it's important to notify Social Security if you receive disability benefits. Royalties would be reported for taxes as self-employment earnings, and Social Security would assume that those earnings were produced in the year they're reported for taxes unless they are aware of the circumstances.

Best, Jerry