Boarders.

(1) Households with boarders. Persons paying a reasonable amount for room and board shall be excluded from the household when determining the household's eligibility and food stamp benefit level. Unless the household with whom the boarder lives requests that the boarder be part of their household as specified in section 387.14 of this Part, the household's eligibility is determined as follows:

(i) Income from the boarder. The income from boarders shall include all direct payments to the household for room and meals, including contributions to the household's shelter expenses. Shelter expenses paid directly by boarders to someone outside of the household, such as to the landlord or the utility company, shall not be counted as income to the household.

(ii) Cost of doing business. After calculating the income received from boarders, the local department must exclude that portion of the boarder payment which is a business cost. Furthermore, such costs cannot exceed the payments received from the boarder. The cost of doing business must equal one of the following:

(a) the cost according to thrifty food plan for a household size that is equal to the number of boarders; or

(b) the actual documented cost of providing room and meals, if the actual cost exceeds the appropriate thrifty food plan. If actual costs are used, only separate and identifiable costs of providing room and meals to boarders shall be excluded.

(2) Deductible expenses. The net income from self-employment will be added to other earned income and the 20-percent earned income deduction specified in section 387.12(b) of this Part will be applied to the total. Shelter costs actually incurred by the household, even if the boarder contributes to the household for part of the household's shelter expenses, will be considered in determining if the household will receive a shelter deduction. However, such shelter costs can not include any shelter expenses paid directly by the boarder to a third party, such as to the landlord or utility company.

(3) A reasonable amount for meals shall be calculated according to either of the following meal plans:

(i) boarders whose board arrangement is for three meals or more per day shall pay an amount which equals or exceeds the thrifty food plan for the appropriate size of the boarder household; or

(ii) boarders whose board arrangement is for two meals or less per day shall pay an amount which equals or exceeds two thirds of the thrifty food plan for the appropriate size of the boarder household. When the boarder's payments for room are distinguishable from the payments for meals, only the amount paid for meals will be evaluated in determining if reasonable compensation is being paid for meals. The reasonable monthly amount for meals shall be paid in cash. In no event shall food stamps be paid for meals and be credited toward the monthly payment.