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S N A P M A N U A L

140 2) For legally incorporated businesses that are not "S Corporations", income is not treated as self-employment income. If there is a question concerning whether the business is legally incorporated (Inc. will be shown after the name of the business), the worker can inquire on the following website https://businessfilings.sc.gov/businessfiling. A household member may be an employee and/or shareholder of a corporation. If a household member is employed by the corporation, that income will be reported as taxable employment income. This pay would be distributed through regular employment stubs and the amount earned for the year can be found on Form W2. The corporation may also distribute dividends to the shareholders. Additional distributions to the household such as checks made out to cash or household expenses from the corporate checking account also count as income. This information should be listed on the household's personal tax return as dividend income, reported on line 3b of Form 1040.

(B) Deduct 40% of the total income from total income derived in (A) to arrive at the self- employment income. The 40% expense deduction is a mandatory standard deduction given to households who incur allowable self-employment costs. Self-employed households who do not incur any allowable self-employment costs are not eligible to receive the standard deduction.

NOTE: The expense deduction cannot exceed 40% of total self-employment income. Actual costs of doing business are not allowed.

(C) Divide the remaining amount of self-employment income by the number of months over which the income will be averaged.

This amount is the monthly net self-employment income. (3) Self-employment costs To arrive at the net income to be budgeted, the Agency must consider allowable costs of producing the self-employment income by the household. Any household that incurs allowable costs of producing self-employment income are entitled to receive the standard self-employment deduction of 40% of self-employment income. Actual self-employment costs are not allowed. Allowable costs include, but are not limited to: • Identifiable costs of labor (e.g. salaries, employer share of Social Security insurance) • Stock, raw materials, seed, fertilizer and feed for livestock • Cost of feed for work • Rent and cost of building maintenance • Business telephone • Costs of operating a motor vehicle required in connection with the operation of the business