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******** STRUCTURES NOT CONSIDERED TO BE SELF-EMPLOYMENT*********** Participants who operate corporations are employees of the corporation. Please see paragraph below.

1. LLC-LIMITED LIABILITY COMPANY 2. S-CORPORATIONS 3. CORPORATIONS

For SNAP purposes, owners of LLCs, S-Corporations, and any other corporations are considered employees of the corporation and therefore, cannot be considered self-employed. Because these SNAP participants are not considered self-employed, they are not entitled to the exclusion of allowable costs of producing self-employment income. The income from these types of corporations should be treated as regular earned income (wages and salaries), not self-employment income. Corporations are legal entities and are responsible for their own debts and obligations. We must determine the correct type of business structure during the interview (Please see Business Process). An S-Corporation must file an annual information return (IRS Form1120 and 1120 K-1) to report the income, deductions, gains, losses, distributions, etc., from its operations, but it does not pay income tax. Profits or losses are “passed through” to its shareholders. Each shareholder includes his or her share of the corporation’s income or loss on his or her tax return (IRS 1040). The 1040 form will outline the SNAP participant’s income (to be entered as wages & salaries).

Although these corporations are not considered self-employment, the income from these corporations, as reported on the household's Form 1040, should be counted in determining the household's eligibility and benefit level. The income would then be annualized. If the corporation has not filed taxes yet (i.e., a new business), the worker would anticipate income until a tax form is available. Distributions and other payments by an LLC, S-Corporation, or a corporation must be treated as wages if it is listed on the individual’s 1040. If distributions are found on the Schedule K for the corporation but are not found on the individual’s 1040, we want to clarify whether those distributions were reinvested into the company.

• Fees paid to corporate officers are considered wages and salaries – they are paid to corporate officers in exchange for work performed but taxes are not withheld. This income will usually be reported on the INDIVIDUAL’S 1040 form.