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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200B – Income: MAGI Categories Page |143

Effective Month: July 2025

profits are taxed accordingly. Dividends, when paid, are taxed to stockholders who report them as income. A stockholder may also be an employee of the corporation, in which case wages are counted as earned income (not self-employment).

Example – S Corporation employee – A parent applicant is one of 12 shareholders in a carpet cleaning business with annual profits of $72,000. The parent formed the corporation, is responsible for its management and is actively involved in the businesses that have contracted with the corporation for services. His annual self- employment is $6,000 as shown on his federal tax return as S Corporation income ($72,000 divided by 12 shareholders). His monthly earned income is $500.

Example – S Corporation earning passive income – a parent applying for her children is one of 10 shareholders in a security company formed as an S Corporation. She does not perform any services for the corporation. Annual profits are verified as $120,000. Her 1/10th share is $12,000 annually, as reported on her federal tax return as S Corporation income. Her unearned income is $1,000 monthly.

200B.03.04 DETERMINING EMPLOYMENT STATUS USING FEDERAL TAX RETURNS Income, as discussed above, may be in the form of wages, unearned income or self- employment. A self-employed person may be: • A sole proprietor of a business, • A general partner in a partnership, • A general partner in a Limited Liability Partnership (LLP), • A member of a Limited Liability Company (LLC) that is taxed as a partnership, • A shareholder in an S Corporation who is actively engaged in the operation of the business. Each self-employment business is separate. If multiple self-employment businesses are involved, calculate the net self-employment for each self-employment business separately then add the total amounts together to get total income.