9074.3.1 Food Stamp Self-employment Manual Guide SELF-EMPLOYMENT INCOME

Income derived from the provision of services or selling of goods when a person is not an employee of another. Common element – Tax and Social Security payments are the responsibility of the individual. GUIDELINES The following guidelines should be used during the process of documenting and verifying gross receipts, determining allowable expense deductions, and determining the type of bookkeeping used by the client. Questions to Ask: Are business and personal funds co-mingled? Are daily/monthly ledgers maintained documenting income and disbursements? What tax returns have or will be filed? What tax year is being used? For partnerships: Is there a Contract Structure? If business named other than owners, is business incorporated? Is there a Federal or State number? Is a separate checking account maintained for business? What to look for: Business and income costs must be identifiable as separate from personal expenses to be allowed as deductions. If canceled checks are available, they should be examined with accompanying receipt and or invoices showing identifiable itemized costs. For income verification, check bank statements and sequentially numbered receipt/invoice records. Same as above. Obtain specific tax schedules, i.e., Schedule C, K or 1065 showing business deductions. Quarterly returns. NOTE: The 1040 line entry re: business loss/profit cannot be used as it incorporates deductible business expenses not permitted by FS regulations. Obtain copy of agreement which delineates proportionate shares of partners. Document parties involved. Obtain Corporation documents. Confirmation of parties involved who have access to tax funds. Canceled checks with accompanying receipts and/or invoices showing identifiable itemized costs. SUMMARY OF COSTS NOT PERMITTED AS DEDUCTIONS: Personal mileage to and from place of business. State, Federal or Social Security Taxes. Depreciation. Deposits into Retirement Accounts, Personal Life & Health Insurance.