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Title 8: Medicaid Page 55 Iowa Department of Health and Human Services Employees’ Manual Chapter E: Income Non-MAGI-Related Self-Employment Revised April 11, 2025 Determining Income from Self-Employment Use the person’s federal income tax return from the previous year to project self- employment earnings in the following tax year. The following schedules may be used:  Schedule SE, Computation of Social Security Self-Employment. For net earnings, use Section A, line 4 or Section B, line 4.C. For net loss, use Section A, line 3, or Section B, line 4.C.  Schedule C, Profit or Loss from Business or Profession. Use the line entitled “Net Profit or Loss.”  Schedule F, Farm Income and Expenses. Use the line entitled “Net Profit or Loss.” If the client indicates that the last tax return is not an accurate indicator of future income, or if a change occurs, project self-employment income for the taxable year based on the best available information. If the business has not been in operation long enough to have income tax records, project income based on the client’s records. If the client’s records are not available and no other evidence can be obtained, ask the client to provide a signed statement of projected self-employment earnings. Make a new determination of net income when a more accurate projection can be made, but no later than six months from the determination of eligibility. Apply a 15.3% deduction to net profit to determine countable self-employment earnings if:  The net profit exceeds or is expected to exceed $400, and  The client has filed or expects to file a federal income tax return and therefore will pay the self-employed social security tax. This deduction recognizes a portion of the additional Social Security taxes that a self-employed person must pay as a business expense. If the Social Security tax will be paid, multiply the net profit by 15.3% then subtract this amount from the net profit to determine countable self-employment income. If the profit is expected to be less the $400, or the client does not anticipate filing a federal income tax return, do not allow the 15.3% deduction.