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1. Purchase costs of capital assets or durable goods, whether or not set up on a depreciation schedule. Durable goods and capital assets are business items expected to last a long time and include farm machinery, equipment, buildings, computers, swing sets, cribs, DVD players, furniture, highchairs, vehicles, hair dryers, tricycles, etc. All items purchased prior to a business opening are capital expenses. 2. Principal portion of loan repayment – the interest payment on a business loan may be deducted; 3. Federal, state, and local income taxes, 4. Transportation to and from work – the cost of commuting to the business from home is not allowed, including the cost of commuting to the job site if the business does not have a set place of business. EXCEPTION: When the client is transporting tools/supplies necessary to work at the job site (i.e., a “loaded” trip), transportation costs may be claimed. BUDGETING: Self-employment income and expenses are always annualized; expenses are allowed when paid, not when billed. The period the income is intended to cover is not considered. NOTE: When the client reports their self-employment business has ended, the annualized income is end-dated. Income tax forms are used for annualized self-employment, if available. Use the most current tax forms unless the client expects a substantial change in their business or income. NOTE: Substantial changes include starting or ending a business; increasing or reducing business operations, etc. If tax forms aren’t available, the income is still annualized, but other documentation must be provided to determine annualized income. NEW BUSINESS: Determine income for a new business by averaging the income and expenses for the months the business has been in operation. If there is no reliable history, the eligibility staff member and the client must agree on a reasonable projection. RENTAL INCOME: Rental income may be earned or unearned depending on whether or not the client is materially participating in the rental business (see ‘Activities that are Not Self-Employment’ in this section for more information), and is determined on a case-by-case basis. The cost of business is deducted to determine net income for both earned and unearned rental income. ROOMER INCOME: Countable. Roomer income may be earned or unearned depending on whether or not the client is materially participating in the business. If the client is materially participating, treat roomer income as earned self-employment. When the client is not materially participating, roomer income is unearned. Earned and unearned roomer income is offset based on prorated household expenses (i.e., the home has 5 total rooms, excluding bathrooms and attics/basements (unless converted to living spaces) and the roomer rents one room; 20% of the household shelter expenses are allowed). BOARDER INCOME: