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Title 7: SNAP Page 63 Iowa Department of Health and Human Services Employees’ Manual Chapter I: Specific Households and Participants Self-Employed Households Revised February 13, 2026 Income Procedure: Consider a net monthly loss as zero income, unless the household has more than one self-employment business, or has self-employment income from farming. See Offsetting Loss in One Enterprise from Gains in Another and Offsetting a Farm Loss Against Other Countable Income for more information. Add the earned monthly net self-employment income to any other earned income and apply the earned income deduction to the total. Most self-employment income is earned, but some rental income and income from property sold on contract is considered unearned self-employment income. When self-employed households file federal income tax returns, the tax returns are generally used as verification. However, if a self-employed household does not file taxes, it must provide records for actual income and expenses. Proof of expenses is not required if the household chooses to use the standard deduction for self-employment expenses. If part of the expense was for personal use, the household must identify the percentage used for the business. If using actual expenses, only allow that portion used for the business as a deduction. Comment: It is the household’s choice whether they want to determine net self- employment income by using the standard deduction or providing verification of actual expenses. Work with the household to determine what is best for their circumstances. If the household states they want to use actual expenses but fails to provide verification, allow the standard deduction of 40% if you have verification of the income. The following sections explain:  Standard deduction  Allowable costs of producing income  Nonallowable cost of producing income  Shelter and utility deductions  Rental income  Income from property sold on contract  Offsetting loss in one enterprise from gains in another Standard Deduction Legal reference: 7 CFR 273.11(b) Policy: When a client requests to have the standard deduction used instead of actual expenses, determine net self-employment income by deducting 40% from the gross self-employment income received. This deduction is intended to cover the costs of producing the income.