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Profit, or net income, from self-employment is the total income received, less the business expenses directly related to producing the goods or services and without which the goods or services could not be produced. The applicant/recipient must provide verification of their business expenses as documented on their federal tax return. If the applicant/recipient has been self-employed for less than a year, they may use business receipts or other sources to provide proof of business expenses until their next scheduled redetermination. If the applicant/recipient cannot provide documentation of their business expenses, the individual's gross income shall be used.

If an individual who was self-employed incorporates their business, either by himself or with another individual, he/she is no longer considered self-employed. His/her wages or salary will be paid by the corporation and will be considered regular earned income, not self-employment income. Limited liability companies (LLC) are not incorporated so the income may be considered as self-employment.

If obtaining verification of business expenses will delay the eligibility determination, the LDSS must advise the applicant/recipient that the family's eligibility and copayment amount may be determined without providing a deduction for these costs. If these costs or a portion of them cannot be verified within 30 days of the date of application, the LDSS must determine the family's eligibility without providing a deduction for the unverified portion. The applicant/recipient must be given at least 10 days to provide the verification.

Averaging of Self-Employment Income 1. Self-employment income which represents a household's annual support must be averaged over a 12-month period, even if the income is received in a shorter period of time. For example, income from a farmer's crop that represents the farmer's annual support must be averaged over a 12-month period, even though the income is received in a shorter period. In addition, self-employment income that represents a household's annual support must be averaged even if the household has income from other sources.

2. Self-employment income that does not represent a household's annual support must be averaged over the period of time the income is intended to cover. This type of seasonal self- employment includes providers who receive their income in the summer or during the tourist season and supplement it through another source during the rest of the year.

3. Households with newly formed enterprises that have been in existence less than a year must have their self-employment income averaged over the amount of time the business has been in operation, and the monthly amount projected for the coming year.

Contract Income

Contract earnings are defined as wages guaranteed by a contract. This does not include work on an hourly or piecework basis or self-employment. A guaranteed wage is one which is received by an individual employed on a contractual basis and paid over a period of time. Earnings of this nature will be prorated according to the procedures outlined in subsection I of this section.