1115.040.15 Computing Averaged Self-Employment Income – DSS Manuals

IM-88 October 4, 2006 ; IM-167 September 10, 2001

The manner in which income is received and expenses paid determines the method of budgeting and computing income. Net self-employment income (income after expenses of producing are deducted) is included in the discussion below on self-employment income.

Anticipate monthly income as follows:

Determine all types of self-employment income and expenses of producing that income. Review IRS schedules to locate all income sources and expenses of producing income.

NOTE : Do not count recaptured depreciation as income for food stamps. The IRS requires that depreciation claimed as an expense be shown as income if the depreciated item is sold prior to what is considered the end of its useful life.

EXAMPLE : A combine is depreciated over a ten-year period of time and the machine is sold after five years.

Establish the period of time over which the self-employment income is intended to cover by reviewing IRS tax forms, business ledgers, and other dated documentation (also discuss this information with the EU). Self-employment income received monthly but which represents an EU’s annual support is normally averaged over a 12-month period. If, however, the averaged amount does not accurately reflect the EU’s actual monthly circumstances because the EU experienced a substantial increase or decrease in business, calculate the self-employment income on anticipated, not prior, earnings. A substantial increase or decrease results when averaged income does not accurately reflect monthly income. Self-employment income intended to meet the EU’s needs for only part of the year is averaged over the period of time the income is intended to cover. EXAMPLE : For self-employed vendors working only in the summer and supplementing their income from other sources during the balance of the year, average self-employment income over the summer months rather than over a 12-month period. If an EU’s self-employment enterprise has existed for less than a year, the income from that self-employment enterprise is averaged over the period of time the business has been in operation and the monthly amount projected for the coming year. If an applying or ongoing EU expects income from a new self-employment enterprise, average the income over the period of time it is expected to cover, but do not budget the averaged amount until the first month income is actually received. EXAMPLE : An EU begins a self-employment enterprise in January, but does not expect the first of its income until March. Anticipate and average but do not count any income until the budget month of March. Rental property income is annualized to prevent counting rental property as a resource during vacancy periods. Income from rental property or a beauty operator may be received monthly, but some expenses are paid once per year (such as property tax, insurance, license fees). In determining monthly income, prorate the yearly cost and deduct the monthly amount from income.

If income shown from tax records and such is not expected to continue, or will continue at a different amount, record the decision of how income was anticipated for the current certification period.

If information is received during the certification period, indicating the current year’s income differs from the prediction (such as crop failures, hail damage, and the like), process the changes.

NOTE : Information correctly reported by the EU and correctly anticipated at the time of certification, requires no action if overissuances or lost benefits are later found. If the self-employed person reports a change in income or expenses, adjust the benefits within the time frames for the remaining portion of the certification period.

To enter income information in FAMIS, take the following steps.

Enter FMX2 or SELINC on the command line and press enter to arrive at the Select Income Screen.

Prompt or enter the DCN, press enter.

Press F14=ADDINC to arrive at the Income (FMX0) screen.

Enter A on the command line.

Prompt or enter the “type” of income.

Prompt or enter the “source” of income.

Enter the source name, begin date, and report date.

Press enter. The message “Successfully added” appears.

Press F6=DETAILS to arrive at the Income Amount (FMX3) screen.

Enter the month, frequency, and calculation method.

Tab to the COM line, enter an “S”, and enter the amount, etc.

Press enter to commit the information to FAMIS.

Press F18=COMMENT and enter a comment concerning the income information.

NOTE : Always review the Food Stamp Budget Summary (FM4A) screen prior to authorizing a case action. From the Budget Summary screen press F14=INCSUM to view the Income Summary Detail (FM33) screen.