Will Receiving Natural Gas Royalties Affect My SSDI Payments?

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Receiving natural gas royalties can lower your Social Security Disability Insurance, or SSDI, monthly benefits. SSDI rules allow recipients to work or earn income and still receive SSDI payments each month. However, if your income surpasses a certain threshold, your SSDI monthly benefits will be reduced.

Natural Gas Royalties as Income

Landowners who lack the assets and the equipment to extract oil and natural gas from their land often lease property and extraction rights to companies that are capable of removing the oil or natural gas. In return, the company pays the landowner a royalty on the gross revenue that it receives from the sale of the oil or natural gas. The Internal Revenue Service and the Social Security Administration, or SSA, consider oil and natural gas royalties to be unearned taxable income. As a result, if you receive SSDI benefits, you are required to report such income to the SSA.

Benefit Deduction

If you are an SSDI recipient, most of the income you earn will reduce your monthly benefit. As of October 2011, the SSA disregards the first $65 to $85 that you earn before reducing your monthly benefit by $1 for every $2 you earn from oil and natural gas royalties. If you are an SSDI recipient who also receives $600 a month in oil or natural gas royalties, the SSA will subtract the first $85, leaving $515. The administration then subtracts half of this amount -- $257.50 -- from your monthly benefit. If you receive the maximum Supplemental Security Insurance, or SSI, benefit of $674 a month, your remaining benefit is $416.50 a month after applying the reduction.

Substantial Earnings

While you can earn additional income and receive benefits at the same time, your earnings must remain below the substantial earnings threshold, which the SSA sets each year. As of October 2011, earnings that surpass $1,000 a month are considered substantial; the threshold for blind recipients is $1,640 a month. SSDI recipients who receive substantial earnings from oil and natural gas royalties can no longer receive SSDI benefits.

Considerations

Some states provide supplements to disability benefits, which allow recipients to earn more income before benefits stop due to substantial earnings. You can contact your local SSA office to determine if your state provides benefit supplements and whether you are eligible. In addition, even if your benefits are stopped due to substantial earnings, you can still receive SSI benefits in the form of Medicaid if your earnings fall below a certain level.

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