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UPDATED: JANUARY 2012

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INCOME EARNED

SELF-EMPLOYMENT OR SMALL BUSINESS INCOME

Do not allow personal expenses and entertainment, personal transportation, purchase of capital equipment to expand a business*,or payment on the principal of loans or mortgages. Depreciation, depletion, amortization and 179 expenses may be allowed for SSI- related A/Rs.

*NOTE: The repair or replacement of existing capital equipment is allowed.

Assume that all deductions taken on tax returns or business records are allowed by the IRS, unless there is conclusive evidence to the contrary.

If the annualized self-employment income indicates a loss (negative dollar amount), use zero income.

EXCEPTION: Within a single type of business, use zero income only when the tax return or business record indicates a cumulative loss, for example: an A/R has three rental properties; two show a net profit and one shows a net loss; use the loss to off-set the profits, and do not reduce the loss to zero unless the cumulative bottom line for the three properties is a negative dollar amount.

If tax returns are not available because the A/R indicates:

• that the business is new, and no federal tax return has yet been filed; or, • that last year’s tax return is not representative of the current year’s earnings; or, • that s/he does not file a tax return for the business,

then the Financial Status Form (DOH-4469) can be used to document the self-employment income.

(MRG)