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Title 5: Centrally Administered Programs Page 45 Iowa Department of Human Services Employees’ Manual Chapter E: Healthy and Well Kids in Iowa (hawk-i) Income Revised August 20, 2010 Income Considered The allowable costs of producing self-employment income are determined by the costs allowed for income tax purposes, including the cost of depreciation of capital assets identified for income tax purposes. See Self-Employment Income for more information. Earned Income Deduction Each person in the household whose nonexempt income earned as an employee or from self-employment is considered in determining hawk-i eligibility is entitled to a 20% earned income deduction before the determination whether a premium should be assessed and the amount of the premium. The deduction is intended to include work-related expenses other than child care, such as taxes, transportation, meals, and uniforms. Unearned Income Legal reference: 441 IAC 86.2(2) Unearned income is any income in cash that is not gained by labor or service. The available unearned income shall be the amount remaining after the withholding of taxes (FICA and state and federal income taxes). Examples of unearned income include, but are not limited to: ♦ Veterans’ benefits. ♦ Unemployment compensation. ♦ Child support and alimony payments received for a member of the family. ♦ Social security benefits (the amount of the entitlement before withholding of a Medicare premium). When taxes (FICA and state and federal income taxes) are actually withheld from unearned income, the amount of income to count in the eligibility determination is the gross amount of unearned income minus the taxes. Evaluate any other deductions from unearned income on a case-by-case basis to determine if the deduction is an allowable deduction. When no taxes are actually withheld from the unearned income, the amount to count in the eligibility determination is the gross amount, even if the unearned income is taxable and must be reported on state or federal tax returns.