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Subsidized Child Care Assistance Program Policy Manual Chapter 7. Family Definition and Determining Income Eligibility Revised 08/01/2024

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worker should review and average the past 12 months of earnings and expenses from business records, the self-employment verification form or the previous year tax return, if representative, to calculate the income and level of care.

4. In any temporary loss of profit situation, the child care worker must document the case thoroughly. Refer to X. Verification of Income Types

C. Calculation of Self-Employment and Operational Expenses 1. Tax Forms When an applicant/recipient submits a tax form (Schedule C, Schedule K, etc.) as verification of self-employment, the child care worker must determine the gross income amount from the tax form. The child care worker must then determine the total expenses claimed on the tax form and deduct that total from the gross income amount to determine the countable self-employment income. If expenses claimed on the tax form are less than 20% of the gross income, the applicant/recipient will receive the automatic 20% deduction.

NOTE: Tax forms must be filed with the IRS in order to be accepted as verification of self-employment.

For example: An applicant/recipient is self-employed and provides a Form 1040 Schedule C tax form as verification.

Part I Income

1 Gross Receipts or sales. $341,840 2 Returns and allowances

3 Subtract line 2 from $341,840