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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200A – Income: ABD Categories Page |107 Effective Month: July 2025 STEPS PROCEDURE costs of expenses incurred on the profit and loss statement to arrive at proper NESE. • The person cannot or will not provide the profit and loss statement, but alleges an amount of NESE, add the value of the withdrawals to the person’s allegation of NESE. 200A.09.08A VERIFICATION OF NESE Verify NESE whenever an individual is self-employed or has been self-employed during the current taxable year by obtaining the most recent federal income tax return filed with IRS. If the business is new, use the individual’s business records or the best estimate available. The following schedules from the federal income tax return can be used to determine NESE: Schedule Section or Line Schedule SE Net Earnings: Part I, Line 3 or Line 4.C NOTE: If line 4c is 400 or more, this is the NESE. If line 4c is less than 400, line 3 is used. For example, line 3 shows $410 and line 4.C shows $378. Line 3 should be used because no tax was due. Net Loss: Part I, Line 3 Schedule C Line entitled “Net Profit or Loss” Schedule C-EZ Line entitled “Net Profit” Schedule F Line entitled “Net Profit or Loss” 200A.09.08B ESTIMATING NESE FOR THE CURRENT TAXABLE YEAR Use the first of the following methods in the sequence below, which is applicable: