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SNAP CERTIFICATION MANUAL – SECTION 5000 5600 Self-Employment Income 5632 Contractors

5632 Contractors SNAP Manual 01/01/00 Some contractors are considered to be self-employed while others are not. The status of a contractor must be decided on a case-by-case basis. A self-employed contractor usually operates a separate, more specialized business than the proprietor of the main business and must pay his or her own expenses. He or she may not have an established work schedule and specified wages. Usually, the employer will not withhold social security and income tax from a self-employed contractor’s earnings. EXAMPLE: A sharecropper who pays the costs of doing business and receives a portion of the net income in exchange for his labor is a self-employed farmer. A sharecropper who does not pay the costs of doing business is not a self-employed farmer.

5633 Corporations SNAP Manual 01/01/00 Corporations are separate legal entities responsible for its debts and obligations. Shareholders who receive only dividends are entitled to neither the costs of producing self-employment income nor the earned income deduction. The dividends will be counted as income in the month received or prorated over the period of time the payment is intended to cover. If a household has shares, in an S Corporation, the S Corporation income reported on the household’s form 1040 must be counted as income. Income from an S Corporation will be annualized, that is averaged over a 12-month period, and the earned income deduction will be allowed. If an individual owns a corporation other than an S Corporation and receives a salary from that corporation, he or she is considered to be an employee of that corporation. The salary will be handled as earned income in the SNAP budget. The resources of a corporation including bank accounts, belong to the corporation regardless of whether or not they are income producing. Resources owned by a corporation will be excluded when determining SNAP eligibility. If an individual owns stock in a corporation, the stock is counted as a resource unless the stock is essential to the individual’s employment and the employee works at least 30 hours per week in the business or earns 30 hours per week multiplied by the federal minimum wage. If the employee of a corporation must hold stock in the corporation as a condition of employment, the stock will be considered essential to employment.