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Shelter Expenses: Self-Employment Business Connected to or on Home Property: When a farming or other self-employment business is connected to or on the same property as the client’s home, a breakdown of farm/business shelter expenses (e.g., rent or mortgage) from personal shelter expenses must be made. Do not allow questionable expenses when the client cannot or will not provide proof of separate business and personal shelter expenses. In-Home Self-Employment Business: If a self-employed client, who operates their self-employment business from their home, wants to claim part of their shelter expense as a business deduction, the personal shelter expenses must be separated from the business expenses. Only the expenses for the portion of the home that is exclusively used for the business are allowed. Home shelter costs may be allowed as a business deduction, if the client spends a significant amount of time conducting business activities in the home; and, if the business is NOT related to dependent care, ONE of the following may be allowed: 1. The expense for a portion of the home used exclusively for self-employment inventory storage; or 2. The expense for the portion of the home that is used exclusively to conduct business activities (the space cannot be used for any other purpose). Shelter expenses are not allowed when the majority of income is made outside the home and the home is used only for administrative purposes. Determining Allowable Shelter Expense: A breakdown is determined using one of the following: 1. The client’s expense calculation; 2. Amount listed on the client’s IRS form 8829 (when home used for dependent care or inventory storage) or other income tax form; 3. Expense verifications the client provides (for business connected to/on home property); or 4. The ratio of business square footage to square footage of entire home (for dependent care or other in-home business). The expense amounts listed on income tax forms is considered valid, and is only questioned if the information appears inaccurate, such as the client’s entire shelter expense is deducted. If this happens, the expense can be recalculated as listed above, or with the client’s consent, can be valued using vendor/in-kind policy in Section CMA 501-1 Unearned Income. Non-Allowable Expenses: Non-allowable expenses are added back into self-employment income when listed on tax forms or are not deducted when calculating monthly self-employment income. Examples of non-allowable expenses include: