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Title 5: Centrally Administered Programs Page 70 Iowa Department of Human Services Employees’ Manual Chapter E: Healthy and Well Kids in Iowa (hawk-i) Self-Employment Income Revised August 20, 2010 Determination of Self-Employment Self-Employment Income Legal reference: 441 IAC 86.1(514I), 86.2(2) Determination of Self-Employment Consider a person to be self-employed when that person: ♦ Is not required to report to the office regularly except for specific purposes, such as sales training meetings, administrative meetings, or evaluation sessions. ♦ Establishes the person’s own working hours, territory, and methods of work. ♦ Files quarterly reports of earnings, withholding payments, and FICA payments to the Internal Revenue Service. If it is difficult to identify whether a person is an employee or self-employed, ask the applicant to provide a written statement from the person or agency for whom that person works. If the person or agency considers the person to be self- employed, consider the income as self-employment income. You can also contact the IRS to determine if the IRS would consider the person to be self-employed or an employee. Frequently a new employee is considered to be in an employee-employer relationship until that employee gains sufficient experience and knowledge of the company’s mode of operation. The employee may then move to the status of a self-employed person. A self-employed person may not file quarterly reports or an income tax return, but that does not change the person’s self-employed status. For example, people who baby-sit in their own home are considered self-employed, even though they may not file any reports. Determination of Net Profit “Net profit” means gross income minus allowable business expenses. Determine countable income (net profit) from self-employment using the best information available. Usually, the expenses allowed by the Internal Revenue Service (IRS) are allowed when determining net profit for hawk-i.