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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200A – Income: ABD Categories Page |106 Effective Month: July 2025 STEPS PROCEDURE spouse in that month. Apply this procedure whether a couple filed jointly or separately and regardless of which member of the couples below incurred the loss: • An eligible couple • An eligible individual with an ineligible spouse • Two parents Apply the 7.65% deduction This deduction recognizes part of the Social Security taxes paid as a business expense. If Social Security taxes are not paid (i.e., when NESE is less than $400, there is a net loss or when no tax return is filed), the deduction does not apply. When Social Security taxes were paid on NESE, multiply net profit by .9235 to determine countable NESE. Include the distributive share for partnerships Any distributive share (whether distributed or not) of income or loss from a trade or business carried on by a partnership is included in NESE. Allow Work Expenses If an individual is self-employed (whether or not he is also a wage earner), reduce his earned income by any allowable work expenses that have not already been used to compute NESE. Withdrawals for personal use When a person alleges (or it is discovered) that cash or in-kind items are withdrawn from a business for personal use: • Ask the person whether the withdrawals were properly accounted for, e.g., were either deducted on the person’s federal income tax return in determining cost of goods sold or the cost of expenses incurred or deducted on his business records. • Accept the person’s allegation of whether the withdrawals were properly accounted for. If the withdrawals were properly accounted for, do not count them again as income. If the withdrawals were not properly accounted for, and • The person can estimate the value of the withdrawals, deduct that amount from the cost of goods sold or