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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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20%, NC FAST will deduct the higher expense amount. If the applicant/recipient is determined ineligible from gross receipts income with the 20% standard deduction, the child care worker must ask the applicant/recipient if he/she would like the option to deduct actual expenses. When both parents are self-employed in a two-parent household, each self-employed parent can receive a deduction for self-employment expenses. The 20% automatic expense deduction will be applied to each self-employment. If expense evidence is entered for expenses greater than 20%, the greater amount will be deducted. If one self-employed parent has multiple self-employments, each self-employment and associated expenses is entered separately in NC FAST. For actual expenses, the worker must use expenses reported on the Expense Section on Federal tax documents, or the recipient may provide actual receipts for expenses. Operational expenses must be carefully reviewed to determine the actual level of income available to the family. Operational expenses include business expenses and any other expense that is deductible for purposes of federal or state tax returns. Operational expenses include but are not limited to: 1. Taxes required to operate the business. 2. Licenses, commissions, and permit fees. 3. Rent payments (not for home-based businesses, except that part allowed as a deduction by the IRS). 4. Insurance associated with operating the business (fire, liability, theft, storm, health insurance for employees, Unemployment Insurance, and workmen’s compensation costs). 5. Labor costs including wages and contract labor.