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When the self-employment business is conducted in the household's home and the household wants to claim a portion of its shelter expenses as a business deduction, the eligibility staff member must separate business expenses from personal shelter expenses. The portion of the home used on an exclusive basis for a business is allowed as a business expense. However, the household is not required to use the business portion as a business deduction. The household is entitled to the mandatory utility allowance for its residence and no deduction of utilities for the cost of doing business. NOTE: If the expense is not used as a self-employment expense, it can be used as a shelter expense. A substantial amount of time must be spent doing business in the home (not occasionally) to use home shelter costs as a business expense. If the in-home business is NOT related to dependent care, the business must also meet one of the following two conditions. 1. An allowance for space regularly used for inventory storage may be allowed if the space is identifiable and only used for self-employment; or, 2. The portion of the home must be used on an exclusive basis. The space allocated to the business must be used only for the business. The eligibility staff member determines the usage of home, with the agreement of the household, for business purposes by: 1. The household's calculation of use. 2. Form 8829 percentage (only if the business and personal home costs are separated on this form); or, 3. The ratio of business square footage to square footage of the entire home. The business share of home expenses is allowed as a deduction from the self-employment income as long as it is not also used as a shelter deduction. The household is not required to deduct the business share even if it can be separated from other expenses.

BUDGETING AND VERIFICATION Most self-employment budgets are annualized (SNAP 601-1). Self-employment income intended to support the household on an annual basis is annualized. Temporary or seasonal self-employment income or when a business is not in operation for an entire year is income not representing annual support and is averaged over the period it is intended to cover. For LLCs, S- CORPORATIONS, AND CORPORATIONS, we must request all tax schedules. The following self-employment incomes are always annualized regardless of whether the income is intended to support the household on an annual basis: