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51 | P a g e October 25 2. If the rooms in your home are all about the same size, you can divide the number of rooms used for business by the total number of rooms in your home. Example 1. • Your office is 240 square feet (12 feet × 20 feet). • Your home is 1,200 square feet. • Your office is 20% (240 ÷ 1,200) of the total area of your home. • Your business percentage is 20%. Example 2. • You use one room in your home for business. • Your home has 10 rooms, all about equal size. • Your office is 10% (1 ÷ 10) of the total area of your home. • Your business percentage is 10%. NEW BUSINESS If a new business, the income and expenses from the months the business has been in operation would be counted. RENTAL INCOME Rental income can be considered either earned self-employment or unearned income. For federal tax purposes, this depends on how active an individual is in managing rental property. The cost of doing business (e.g., mortgage, insurance, property taxes, repairs, grounds maintenance, utilities, etc.) is deducted from the gross income to determine net included income for benefit calculation regardless of whether it is earned self-employment or unearned income. Example: A household owns a house separate from its residence and rents out the house. The house is rented for $600 a month and the renters are responsible for paying for all utilities. The only allowable cost of doing business the household reports and verifies is $325 mortgage including property taxes and insurance. You must document in case notes the gross rental income along with the allowable costs of doing business by manually deducting the cost of doing business from the gross rental income ($600-$325=$275) to arrive at net countable income (business income – business expenses). INCOME/LOSSES Losses from corporations are not used to offset any other income. Negative self-employment income is not to be subtracted from other household income but is counted as “$0.00.”