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Chapter: 1800 Income Program: MFAM 3

An individual is considered employed when engaged in a business, occupation or service and paid by another person, group of persons or company. Wages or paid salaries received after employment has ended, such as accrued vacation time, are considered earned income except for severance pay, which is unearned income.

Employer-provided sick pay is earned income as long as the individual plans to return to work after recovering and is still considered an employee. Sick pay is a continuation of salary with normal payroll deductions. 1830.0300 SELF-EMPLOYMENT (MFAM) An individual who owns a business or otherwise engages in a private enterprise is considered self-employed. Income derived from self-employment is considered earned income.

This includes but is not limited to:

1. childcare; 2. sales from a franchise company; 3. picking up and selling cans; 4. farming and fishing self-employment; 5. selling newspapers; 6. income from an S corporation (The income, losses deductions, or credits are based on a partnership agreement and passed on to shareholders based on a pro rata share.); or 7. income from rental property.

1830.0302 Costs of Self-Employment Income (MFAM) Net earned income from self-employment is the total gross income derived from all trades and businesses as computed under the Internal Revenue Code, less deductions allowable under the Code, attributable to such trades or businesses. It includes the individual's share of ordinary net income (or loss) from partnerships even though the partnership profits have not been distributed yet.

The assistance group is required to keep a record of business expenses incurred. Allowable costs of producing self-employment income include, but are not limited to, the following expenses:

1. identifiable costs of labor (salaries, employer's share of Social Security, group medical insurance, employee reimbursements, contract labor, commission, etc.); 2. stock, raw materials, seed and fertilizer, and feed for livestock; 3. rent and cost of normal building maintenance; 4. business telephone costs and utility expenses; 5. costs of operating a motor vehicle when required in connection with the operation of the business; 6. interest paid on debts related to the business property; 7. insurance premiums related to the business; 8. depreciation costs for owned property used in business or held to produce income; 9. travel meals, lodging and entertainment expenses away from home; 10. legal and professional fees; or 11. pension plans. 1830.0306 Earned Income from Farming and Fishing (MFAM) Farming and fishing for profit is self employment. Profits from farming and fishing are earned income.