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CHILD CARE SUBSIDY ELIGIBILITY POLICY MANUAL  5 5.1 EARNED INCOME Earned income is income earned through an exchange of providing a service for payment. Acceptable verification of earned income includes, but is not limited to: (1) At least two pay check stubs dated within the last 60 days; or (2) Provide written documentation to verify income: (A) For ongoing employment: employer name, rate of pay, hours worked per pay period, pay frequency, and explanation of any fluctuations in pay; (B) For new employment: employer name, start date, date of first check, rate of pay, hours to be worked per pay period, pay frequency, and explanation in any expected fluctuations in pay; (C) For end of employment: employer name, last day worked, date of last check; or (3) Contact by DESE to current and/or past employer(s). 5.2 UNEARNED INCOME Unearned income members of the eligibility unit is considered in determining monthly gross income. Verification of unearned income includes, but is not limited to: (1) Award letter or electronic benefit card deposit statement; or (2) Letter from employer with: employer name, rate of pay, hours worked per pay period, pay frequency, and explanation of any fluctuations in pay; or (3) Contact by DESE to the agency issuing income, benefit card recording, or collateral contact to another agency that has pay information on file. 5.3 IRREGULAR OR SPORADIC INCOME The following are considered irregular or sporadic income and are not considered in determining monthly gross income: (1) Money from the sale of property, such as stocks, bonds, a house, or a car (unless the person was engaged in the business of selling such property in which case the proceeds are counted as income from self‐employment); (2) Withdrawals of bank deposits; (3) Capital gains, the profit resulting from the sale of capital investments such as stocks, real estate, etc. (unless the person was engaged in the business of selling such property in which case the proceeds are counted as income from self‐employment); or (4) Non‐recurring lump sum payments.

5.4 INCOME AND DEDUCTIONS FROM SELF‐EMPLOYMENT Self‐employment income is verified through the previous year’s tax return/documentation. If the applicant has been self‐employed for one year or more, the income shall be divided by 12 months to determine monthly gross income. If an applicant has been self‐employed for less than one year, an average of the amount of self‐ employed income over the period of time the business has been in operation shall be used to determine the average monthly earnings. The previous year’s tax forms may be used to verify self‐employment expenses. The following overhead expenses may be deducted from gross self‐employment income: (1) Income from Boarders – Food Expense – allow the monthly Food Stamp issuance amount for a one‐ person household per each boarder. (2) Income from Child Care Self Employment – Meals – Allow $1 per child per meal provided, unless meals are deducted as an expense on the tax schedules, in which case, use the meal deduction from the tax schedule.