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EAP Policy Manual FFY24 Chapter 3 Program Eligibility Requirements Page 31 Self-Employment Income Including Rental and Farm Income When EAP applicants indicate they have self-employment income, EAP collects up to one full year of self-employment income information. On the EAP application, the household is asked when they started their business (i.e., month and year). If the household has been in business for less than 24 months , the Service Provider should provide the household with the Self-Employment Cash Accounting Worksheet (Appendix 3C) and information requirements. When the IRS Form 1040 and Schedule 1 are required to substantiate self-employment income, Service Providers might identify the household also had reported wages during that year. It is appropriate for Service Providers to follow up and determine if the household had additional EAP-countable income. Service Providers should ask questions to determine the source of the potential income, the type of self-employment if there is another job with wages during the EAP eligibility period, and to which household member to attribute the income. If the income is: • Wages from a job unrelated to self-employment, count the income received during the one month EAP eligibility period. • Wages paid from the self-employment business, calculate the self-employment income using IRS Form 1040 – Schedule 1. • Distribution(s) from the business to themselves, calculate the self-employment income using IRS Form 1040 – Schedule 1. • Distribution(s) from the business to another household member (e.g., spouse or another family member), generally this is captured when the self-employment income is calculated using IRS Form 1040 – Schedule 1. If the business considers the distribution dividend income, it is reported on IRS Form 1099. Count dividend income according to EAP policy. The following are example scenarios for using different self-employment income verification methods. Household was self-employed the prior year and filed one IRS Form 1040 and Schedule 1 form Use the ‘Self Employment Tax Worksheet’ functionality in the ‘Household Income Info’ section of eHEAT: • Enter the income from lines 3, 4, 5, and 6 of the IRS Form 1040 – Schedule 1 in the corresponding fields in eHEAT.