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248 (07/2026) Chapter 2:Eligibility • Section 5: Financial eligibility In this situation, the self-employment income should be calculated based on anticipated earnings. In addition, income is not annualized if it is earned in part of the year, it is not intended to cover the full year, and the applicant has different employment for the other part of the year. TANF In the TANF program, Gross income from a self-employed participant is used for eligibility. TANF does not use any deductions to the self-employed income in the calculation for income limits. The gross earnings are used for the initial and exit TANF income limits with no deductions used in the determination. This may be the annualized 12-month income or the representative income from the self-employment business. ERDC The gross earnings of a self-employed individual are used before deductions when reviewing for ERDC eligibility. This means the total earnings are compared to the initial, exit and ongoing ERDC income limits to determine whether the family is eligible for ERDC prior to exploring costs or deductions of the business. If the family is below the ERDC income limits using the gross earnings of their self-employment income, they meet ERDC income eligibility. Costs can be determined at this point. Determining costs There are various ways to treat self-employment income within ERDC: • No costs
If the applicant states they have no cost associated with running their business, the full gross amount is used. • 50% cost
If the applicant states they have at least $1 in costs, they receive the 50 percent deduction. This does not need to be verified. Most businesses have at least $1 in costs. • Total allowable costs
If the applicant says they have more than 50 percent in costs, the full allowable cost can be used. The amount of the deduction does not need to be verified but is limited to costs that fit the definition of an allowable cost as described in Treatment of specific assets. In the ERDC program, individuals may choose if they would like to deduct costs or not. Because countable income is directly tied to their copay amount, it is up to the family to make the best choice financially, whether they need more child care hours or a lower copay (a higher income will result in higher child care hours and a higher copay, while a lower income will result in lower child care hours and a lower copay). After subtracting the deduction, if any, from the gross self-employment income, what remains is used to determine the copay. In ONE, workers need to select which option the family has chosen (zero, .5, or actual cost) in the ERDC Self Employment Deduction screen after running eligibility. After doing so, the system will calculate and display child care hours and copay. For information regarding child care hours for self-employed individuals, click here for Child care hours. REF No additional program-specific information.