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15.6.3.3 Disallowed Expenses Expenses that are allowed self-employment deductions on the IRS business tax forms are allowed expenses for Medicaid. Some specific expenses that have been identified as not allowed in the calculation of Self Employment Income on the IRS tax forms and therefore not allowed for Medicaid are: 1. Net loss carryover from previous periods, 2. Federal, State, and local income taxes, 3. Charitable donations, 4. Work-related personal expenses, such as transportation to and from work, 5. Work-related personal expenses such as pensions, employee benefit and retirement programs and/or profit sharing expenses (Business expenses for employees’ pensions, benefits, retirement programs, and profit sharing expenses are allowable, but the work-related personal expenses of the employer are not), or 6. Principal payments on loans for the purchase price of income producing real estate, capital assets/equipment, and durable goods. 15.6.4 Self-Employed Income Sources All self-employment income is earned income, except royalty income and some rental income. Self-employment income is income that is reported to IRS as farm or other self-employment income or as rental or royalty income. When income is not reported to the IRS, you must judge whether or not it is self-employment income. Self-employment income sources are: 1. Business. Income from operating a business. 2. Capital Gains. Business income from selling securities and other property is counted. Personal capital gains are not counted as income. 3. Rental. Rental income is rent received from properties owned or controlled. Rental income is either earned or unearned. It is earned only if the owner actively manages the property on an average of 20 or more hours per week. If rental income is not reported to the IRS, see SECTION 15.4.23 RENTAL INCOME. 4. Royalties. Royalty income is unearned income received for granting the use of property owned or controlled. Examples are patents, copyrighted materials, or a natural resource. The right to income is often expressed as a percentage of receipts from using the property or as an amount per unit produced. 15.6.5 Calculating Income Maintenance Income IM income (see SECTION 15.6.1.1 INCOME) is anything you receive in cash or in-kind that you can use to meet your needs for food, clothing, and shelter by either: 1. Using IRS tax forms completed for the previous year, or 2. Anticipating earnings (see SECTION 15.6.5.3 ANTICIPATED EARNINGS) 15.6.5.1 IRS Tax Forms and Worksheets IM workers should not complete any IRS tax forms on an applicant's or member's behalf. It is the responsibility of the applicant or member to complete IRS tax forms.