To receive total disability based on individual unemployability (TDIU) benefits, veterans must adhere to the VA’s unemployability income limits. However, these limits only apply to some types of income. Earned income from sheltered work environments and passive or unearned income from investments and rental properties may not count towards these limits.
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Veterans unable to maintain what the VA calls “substantially gainful employment” because of their service-connected disabilities can receive total disability based on individual unemployability (TDIU) benefits.
Veterans may still earn money while receiving these benefits. However, there are limits on how much income they can earn. Separate from earned income, a veteran can receive any amount of passive or unearned income–such as income from rental properties or investments.
In this article about TDIU income limits for veterans:
“They did good by me. I am sick, and the VA was stalling. They got me 100% permanent and total.”
R.W.
Total disability based on individual unemployability (TDIU)
TDIU is a benefit provided to veterans who cannot maintain a steady job. Veterans receiving TDIU receive 100% disability compensation without a 100% disability rating (also called a total rating).
To receive TDIU, veterans must show that they cannot keep or obtain substantially gainful employment due to service-connected mental or physical disabilities. However, veterans may earn money through marginal and sheltered or protected employment and receive TDIU, which is described later.
Substantially gainful employment and marginal employment
The VA will determine that a veteran is maintaining substantially gainful employment if they work in a job that pays a competitive wage above the poverty threshold set by the U.S. Census Bureau. The poverty threshold for a single person under 65 in 2021 was $14,097.
If the veteran’s income is below the federal poverty line or the veteran is significantly restricted in the number of hours he or she is able to work, then, then the veteran may be considered marginally employed.
Sheltered or protected work environments
If the employer makes special accommodations because of a veteran’s medical needs, the job could be considered sheltered or protected employment.
“If a veteran employee is allowed to leave early or take unscheduled breaks due to chronic headaches or panic attacks flowing from their service-connected post-traumatic stress disorder, that’s considered an accommodation that could allow us to characterize the employment as protected or sheltered,” said VA disability lawyer Zack Evans.
Examples of sheltered or protected work environments often occur in family businesses. This work environment could offer accommodations beyond those required by law to allow the veteran to continue working.
While income from marginal employment situations applies to the income limits for TDIU recipients (which is tied to the federal poverty line), income limits do not apply to veterans working in qualifying sheltered or protected work environments.
Can I have income and receive TDIU?
To receive TDIU, veterans must have service-related medical conditions that prevent the veteran from maintaining substantially gainful work. However, veterans can receive passive income or earn income from marginal or sheltered employment while receiving TDIU.
What is considered “earned” income for TDIU?
The VA considers earnings from employment, including self-employment, as earned income when veterans apply for TDIU.
Passive income vs. earned income
Passive income does not count towards the TDIU income limit but earned income does. Any passive income is income you receive from an initial investment that you are not actively working for now. Let’s look at two common questions related to passive income sources: rental properties and stock dividends.
Can I get income from rental properties and receive TDIU?
VA disability lawyer Lori Underwood said rental income is sometimes, but not always, considered passive.
“You will want to ask yourself if you’re actively engaged in the management of the property. It would be considered passive income for a veteran that is not necessarily the person maintaining the property, fixing the leaky faucets, or mowing the grass, but still receiving the rent from the tenant once a month,” Underwood said. “If the veteran was mowing the grass at the properties, that income would be considered earned.”
There is no income limit on passive rental income to receive TDIU.
Can I invest in stocks while receiving TDIU?
Investors’ income from stock dividends, interest, or capital appreciation is considered passive income. There is no TDIU limit to the income you earn in this way.
The only time income from stocks can get in the way of receiving TDIU is if you cross the line from being considered an investor to being considered a trader. If you are considered a trader, the law classifies you as a business, and the income is then considered earned.
There are several criteria to determine whether a veteran should be considered a trader rather than an investor:
- How long the veteran holds their securities before selling
- How frequently the veteran trades
- How much has been earned from trades
- If the veteran is pursuing this income to support their livelihood
- The amount of time the veteran spends buying and selling securities
Can I own my own business/be self-employed and receive TDIU?
Veterans can be self-employed and still receive TDIU if they meet the TDIU criteria and do not surpass any income limits that apply to their situations.
If the veteran’s income from self-employment is below the poverty threshold, it may not be considered substantially gainful but rather marginal employment, which does not prohibit a TDIU award.
If the income from self-employment is over the poverty threshold but is considered sheltered employment, the veteran can still receive TDIU.
How the VA verifies your income
The VA is authorized to verify a veteran’s income to ensure they meet the criteria to receive TDIU. A department at the VA called the Health Eligibility Center (HEC) compares the information provided by the veteran on their submitted financial assessment with records from the Social Security Administration and federal tax information from the Internal Revenue Service (IRS).
“The firm got me to 70%, and I was happy. Individual unemployability was awarded to me and to this day, I’m so grateful. My future is no longer bleak. These people work very hard for you.”
R.C., a Navy veteran in Hawaii
How Woods and Woods can help
With all of the different types of employment and the different set of criteria for each, it can be difficult to determine how the VA would classify your employment and income. If you have questions about your eligibility for TDIU, call Woods and Woods.
Talk to Us About Your Claim:
(812) 426-7200
FREQUENTLY ASKED QUESTIONS
To receive TDIU, veterans must show that they cannot obtain or keep gainful employment due to service-connected mental or physical disabilities. As set by the U.S. Census Bureau, the poverty threshold is the limit for what a veteran can receive in earned income. The poverty threshold for a single person under 65 in 2021 was $14,097. There is no TDIU limit to a veteran’s passive income.
If you are active in the management of the rental properties, the income would be considered earned and would be subject to TDIU’s income limits. If you do not participate in the management of the rental property in any way and receive the rent from the tenants, that may be considered passive income. There is no TDIU limit to a veteran’s passive income.
