Page 28

28

Allowable operational expenses include but are not limited to:

1) Taxes required to operate the business (only the percentage that can be claimed as a business expense),

2) License and permit fees,

3) Interest portion of mortgage (principal not allowed),

4) Rent payments,

5) Insurance on stock, personal and real property,

6) Labor costs and employee benefits such as Worker's Compensation and Social Security,

7) Maintenance of real and personal property,

8) Utility costs paid by the a/b,

9) Products required to operate the business,

10) Interest payments on loans for equipment, etc., necessary for producing the income,

11) Business related transportation costs.

12) Food costs of self-employed babysitters provided to children that they care for in the babysitter’s own home. Use a/b's records of food costs.

6. Verification of Operational Expenses

Attempt to verify operational expenses in the following order.

a. Most recent Federal income tax return/ previous year’s quarterly tax statements. The tax documents must show the itemized operational expenses being deducted.

Some operational expenses allowed for tax deductions are not allowable for self-employment budgeting for Medicaid. Do not allow depreciation as an operational expense.