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Title 7: SNAP Page 64 Iowa Department of Health and Human Services Employees’ Manual Chapter I: Specific Households and Participants Self-Employed Households Revised February 13, 2026 Income The client must state there are some allowable business-related expenses in order to get the 40% deduction.

Ms. A is a self-employed child care provider who does not file tax returns. Ms. A provides verification of gross self-employment income of $15,000 per year. Ms. A states she has expenses related to her child-care business. The worker gives Ms. A the option of using the standard deduction or providing actual expenses to calculate net self-employment income. Ms. A requests to have the standard deduction used to calculate her net income. Her net self- employment income is calculated as follows: $ 15,000 - 6,000 $ 9,000

Standard deduction of 40% $9,000 ÷ 12 = $750 per month net self-employment income Allowable Costs of Producing Income Legal reference: 7 CFR 273.9(c)(9), 273.11(b)(1) If the household chooses to claim actual expenses, deduct from self-employment income the allowable costs of producing that income. Allowable costs of producing self-employment income include, but are not limited to:  Costs of labor  Stock (merchandise purchases for resale)  Raw material  Seed and fertilizer  Insurance premiums  Taxes paid on income-producing property  Rental payments on income-producing equipment  Lease/purchase option payments on income-producing property  Cost of income-producing property, capital assets, equipment, machinery, and other durable goods  Business related mileage, using either the standard mileage reimbursement rate for state of Iowa employees, or the actual expense method (actual costs of operating the vehicle such as gas, maintenance, and insurance).