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Families and Children Manual Policy Manual Number: 010.020 Section: Financial Eligibility Chapter: Countable and Excluded Income
September 1, 2026 Division of Tenncare 5 The NESE is the gross income from any trade or business less allowable deductions for that trade or business. NESE also includes any profit or loss in partnership. For the purpose of determining eligibility, count the NESE on a taxable year basis and divide the total of these earnings equally among the months in the taxable year. Verify net earnings from self-employment on Schedule SE. The amount of net earnings from self-employment that should be reported based on a Schedule SE may be found under line 4.c. of Part I. If line 4.c. shows a positive amount of less than $400, then line 3 is used even if the amount on line 3 is greater than $400. Schedule SE may not be available or usable when: a. An individual has started a new business and was not self-employed in the prior tax year; or b. An individual has applied for or is receiving Title II (Social Security) benefits. 2. Schedule C
Used to report profit or loss from a Sole Proprietor business (general). Net profit or loss is listed on the Schedule C. 3. Schedule F Used to report income and expenses from a farm operation. Net profit or loss is listed on the Schedule F. 4. Business Records When a federal income tax return is not available, or the individual has made changes, stopped or added to the business, business records may be used to determine net earnings. When business records are used, use the individual’s gross income and allow the same deductions that are allowed by the IRS. c. Rental or Royalty i. Rental or Lease Rental income is the amount an individual receives for use of his property after all property expenses are subtracted. Net rental income is countable when determining eligibility. 1. Gross Rental Income: All rental income that an individual collects for the use of his property is included in gross rental income.
2. Rental Expenses: Rental expenses that may be deducted from gross rental income include: a. Pre-rental expenses (expenses related to managing, conserving and maintaining rental property from the time property is available to rent); b. Advertising;