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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200B – Income: MAGI Categories Page |142

Effective Month: July 2025

sole proprietorship with the limited liability of a corporation (members are not liable for company’s debts). • Limited partner who performs services for the company has wages, not SE o Dividends paid are unearned income If LLC files federal income taxes as a corporation, any earned income received by the individual is countable wages, not SE.

Example – LLC – A parent applying for her child is one of 3 members of an LLC with annual profits verified as $144,000. The company’s operating agreement says the LLC is taxed as a partnership with each member receiving an equal share of the profits. The parent’s countable self-employment is $4,000 per month or $144,000 divided by 3 (parent’s annual share) divided by 12 = $4,000 per month.

Example – LLC with limited partner – A parent applying for his children is one of two individuals who have formed an LLC for an auto repair shop. The company files taxes as a partnership but the parent is shown as a limited partner. Even though he is actively engaged in the business and responsible for the management of the LLC, he is not self-employed. His compensation from the business is treated as wages.

CORPORATIONS – a company or group of people authorized to act as a single entity. Ownership is through stock. Owners of stock are the stockholders or shareholders. The most common form is the “S” or “C” Corporation, depending on how the corporation is taxed. 1. S Corporation – the income and expenses of the corporation are divided among its shareholders, based on the percentage of stock owned. Each stockholder must report income on their own tax return. An individual may also receive a salary from the business. An individual actively engaged in the business is self- employed (Schedule E shows this income as “non- passive” income), which is treated as self-employment. An individual who is not actively engaged in the business receiving “passive” income (Schedule E) from the company has unearned income. Income is shown on the 1040 as “S Corporation” income, but Schedule E specifies whether income is passive or non-passive. 2. C Corporation – the income and expenses are filed on a corporation income tax and Dividends paid to stockholders are countable unearned income when received.