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MISSISSIPPI DIVISION OF MEDICAID Eligibility Policy and Procedures Manual CHAPTER 200B – Income: MAGI Categories Page |144
Effective Month: July 2025
200B.03.04A VERIFYING COUNTABLE NET EARNINGS FROM THE TYPE OF BUSINESSES DISCUSSED ABOVE Use the individual’s most recent tax return to verify income for individuals considered self-employed, a shareholder in an S Corporation, a partner in a business or one who has income from a partnership, LLP, LLC or S Corporation. Self-employed individuals include: • Farmers with farming or agricultural income, • Ministers who file taxes as self-employed or a combination of SE and wages, • Individuals with rental income If federal tax returns are not filed, not available, or if there is a change in income anticipated for the current tax year, refer to Chapter 200, Net Earnings from Self- Employment at 200A.09.08, for policy on estimating net earnings from self-employment. Form 1040, and Schedule 1, Additional Income and Adjustments to Income, should be sufficient to verify net earnings from self-employment and/or to determine if income is payable from a source such as a partnership, S corporation, etc. If additional returns are needed to verify an individual’s status as a business partner, and the treatment of the income reported would impact eligibility, request additional needed IRS forms to make an informed decision. Refer any cases with questions on evaluating tax forms to Central Office supervisory staff. Form 1040 Schedule 1 Entries on the Form 1040, Schedule 1, in the Additional Income section provides annual verified income as follows:
LINE 3 - Business income – a positive income entry is net income for self-employed individuals, as discussed above. NOTE: Additional income deductions apply unless the income reported is a loss. Schedule 1, in the Adjustments to Income section, verifies other allowable deductions such as the deductible part of self-employment tax (Line 15) and contributions to qualified health plans for self-employed individuals (Line 17). LINE 5 – Rental income, Partnership income and S Corporation income is reported on this line (along with other types of income, such as trust and royalties’ income). LINE 6 – Farm income (net) is reported on this line.