Averaging Self-Employment Income

Self-employment income must be averaged over the period for which the income is intended to cover, as outlined below: A. Self-Employment as Primary Annual Support When a household receives its annual support from self-employment income, such income is to be averaged over twelve (12) months to determine the household's average monthly income from this source. This policy applies even if the income is received in only a short period of time or the household receives income from other sources in addition to the self-employment income. However, if the averaged, annualized amount does not accurately reflect the household's actual circumstances because the household has experienced a substantial increase or decrease in business, the worker must calculate the self-employment income on anticipated earnings and not on the basis of prior income. B. Self-Employment as Partial Support Households may receive income from self-employment that represents only a part of their annual income. Such self-employment income must be averaged over the self-employment months rather than over a twelve (12) month period. C. Self-Employment Income Received Monthly Self-employment income received on a monthly basis and representing a household's annual support normally will be averaged over twelve (12) months. If the monthly average does not accurately reflect the household's actual financial situation because of a substantial increase or decrease in business, the worker must calculate self-employment income based on the household's anticipated earnings. D. Self-Employment Income from a New Source Income from a self-employment enterprise that has been in business less than a year is to be averaged over the period of time the business has been in operation and the monthly amount projected for the coming year. E. Self-Employment Income of a Farmer 1. If after deducting all allowable business expenses from gross income received from self- employment as a farmer, the costs of producing the income exceed the income derived, such losses shall be offset against other income received by the household. Steps to take in offsetting the loss shall be as noted below. The net losses shall be prorated over the period intended and the monthly prorated amount deducted from other monthly income. 2. For purposes of applying this rule, an individual shall be considered a self-employed farmer if they receive or expect to receive gross annual income of one thousand dollars

($1,000) or more from the farm enterprise. In addition, the following steps shall be taken when determining eligibility and benefits levels of the self-employed farmer. a. The monthly prorated loss shall be deducted first from any other “self- employment” income. b. Any remaining loss will then be deducted from other earned income into the household. This total shall be the figure from which the earned income deduction shall be calculated. c. Finally, any other income shall be added, and this total shall be the amount used to compare the household's gross income to income eligibility standards for the appropriate-sized household.