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the business owner is a corporation, the actual owner(s) is listed in the Entity detail information as a Shareholder with the percentage of ownership identified. • S-Corporation One (1) type of corporation, the S-corporation, is considered a self-employment enterprise. It confers a special tax status to shareholders and operates like a partnership. Income from an S-corporation is taxed at the individual level and is treated like self-employment income from a partnership. The income is passed through to the shareholders based on each shareholders pro rata share.

The S-corporation must file a Form 1120-S, U.S. Income Tax Return for an S-Corporation including Schedule K-1 Shareholder’s Share of Income, Deductions, Credits, etc. Unless the corporation is a new business, each shareholder should have a copy of these forms for reporting their share of the income.

• C-Corporation Another type of corporation, the C-corporation, is not considered to be a self-employment enterprise. In the C- corporation, Shareholders are paid as employees with taxes withheld. If profits are distributed to the stockholders as dividends, the dividend is treated as unearned income to the stockholder. The salary is counted as wages, not self- employment income, even if the individual is the primary stockholder in the corporation. Such wages may includein- kind compensation resulting from the business paying for personal and household bills. Stocks that individuals own in these corporations are counted as resources, even if they are not publicly traded on the stock market.

4080-2 I. ACCEPTABLE VERIFICATION FOR SELF- EMPLOYMENT INCOME Families who participated in the self-employment activity in the prior calendar year must provide the prior year’s actual income when that same business was in operation that year. This may be in the form of their: Federal tax return Form 1040 U.S. Individual Income Tax Return, Schedule C Profit or Loss from Business, Schedule E Supplemental Income and Loss, Schedule F Profit or Loss from Farming, Form 1065