Determining Monthly Income from Self-Employment

The amount of income considered from self-employment in the month of application shall be the gross amount of anticipated income plus capital gains less anticipated costs of doing business. A. To determine average income from self-employment, the worker first must determine the gross amount of income, actual or anticipated, including capital gains, for the period of time over which the self-employment income is being considered. The allowable costs of producing the self- employment income are excluded and the net income divided by the number of months over which the income is intended to cover. For federal income tax purposes, only fifty percent (50%) of the proceeds from the sale of capital goods is taxed. Therefore, if income tax forms are used to determine household income, the eligibility technician must be aware that the full amount of the capital gains is counted as income. B. Allowable costs of doing business include, but are not limited to: identifiable costs of labor; stock; raw materials; seed; fertilizer; payments on the principal of the purchase price of income producing real estate; capital assets, equipment, machinery and other durable goods; interest paid to purchase income-producing property; insurance premiums; taxes paid on income- producing property; and, other similar items that are necessary costs of doing business. C. The following shall not be allowed as a deduction for business costs: 1. Any amount that exceeds the payment a household receives from a boarder for lodging and meals is not allowable as a cost of doing business. 2. Any amount claimed as a net loss sustained in any prior period. 3. Federal, state, and local income taxes, money set aside for retirement purposes, and other work-related personal expenses (such as meals). These expenses are accounted for by the earned income deduction. However, any taxes paid by the business for employees (such as the business share of social security taxes) are allowed as a business deduction. D. Anticipating Capital Gains and Other Self-Employment Income When self-employment income is calculated on an anticipated basis, any capital gains that the household anticipates receiving in the next twelve (12) months, beginning with the date the application is filed, are added, and divided by twelve (12). This amount is used in successive certification periods over the next twelve months unless a change occurs. A new average monthly amount must be calculated over this twelve-month period if the anticipated amount of capital gains changes. The anticipated monthly amount of capital gains and the anticipated monthly self- employment income then are added and the anticipated cost of producing the income deducted. The cost is calculated by anticipating the monthly allowable costs of producing the self- employment income. The monthly net self-employment income will be added to any other earned and unearned income received by the household to determine eligibility of self-employed SNAP applicants. For those households with self-employment income, which is not annualized, the eligibility technician shall anticipate income. Any anticipated proceeds from the sale of capital gains shall be used as income in the month the proceeds are anticipated to be received.