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b. Discuss with the a/b his plans for meeting living expenses. Determine what income is available from other sources.
12. Business being discontinued
a. Application Processing
Show as reserve the remaining portion of the current year's total available net business income.
b. During the Certification Period Include in reserve net proceeds still available from the dissolution of the business.
13. Net Loss from Self-Employment
A Medicaid individual, a member of a Medicaid couple, a Medicaid individual's ineligible spouse or one of two ineligible parents may incur a verified net loss during the tax year being used for base period income. Deduct the verified net loss from any other earned income in the budget, regardless of which individual incurred the loss.
a. Do not use the loss to offset other earned income until it can be accurately established (usually not prior to the close of a/b's taxable year).
Example: Mr. Tyler applies for Medicaid on 2/10/07. He has been self- employed for the past five years. He provides his federal tax return for tax year 2006. During 2006 Mr. Tyler had a net loss of $2,400. Divide his total yearly net loss by number of months in the tax year. Mr. Tyler’s average monthly net loss is $200. ($2,400 divided by 12) Mr. Tyler is married and his wife is employed. He provides her base period wages from January 2007. Her monthly gross wages for January are $750. The average monthly net loss of $200 is subtracted from his wife’s monthly gross wages, leaving $550 of countable gross income to budget.
b. Do not reduce total earnings below zero when deducting the net loss from other earnings.
c. Never subtract any amount of a net loss from unearned income.
F. Farm Income
Farm income is self-employment from production of crops or livestock. Income from a farm which is leased to another individual is counted as rental income.