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employer are considered earned income when they would have been received had they not been deferred.

Source: Social Security Act §1902 (r)(2); 42 CFR § 435.601(b) (Rev 1994).

Rule 9.5: Net Earnings from Self Employment (NESE).

A. NESE is defined as follows:

1. NESE is the gross income from any trade or business, less allowable deductions for that trade or business.

a) 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.

b) NESE also includes any profit or loss in a partnership.

c) NESE is determined on an annual basis.

B. NESE is treated as follows:

1. NESE is verified whenever an individual is self-employed or has been self-employed during the current taxable year based on the most recent federal income tax return filed with IRS, or if the business is new, based on the individual’s business records or the best estimate available.

2. NESE, after any appropriate offsets and deductions, is counted as earned income.

Source: Social Security Act §1902 (r)(2); 42 CFR § 435.601(b) (Rev 1994).

Rule 9.6: Payments for Services Performed in a Sheltered Workshop or Work Activities Center.

A. These payments are defined as follows:

1. Payment for services performed in a sheltered workshop or work activities center are what an individual receives for participating in a program designed to help him become self- supporting.

a) A sheltered workshop is a nonprofit organization or institution whose purpose is:

1) To carry out a recognized program of rehabilitation for handicapped workers; and/or

2) To provide such individuals with remunerative employment or other occupational rehabilitating activity of an educational or therapeutic nature.