For each business, calculate gross self-employment income by adding all gross receipts and subtracting allowable expenses. Also see 0017.09 (Converting Income to Monthly Amounts), 0017.15.33 (Self-Employment Income), 0017.15.33.06 through 0017.15.33.30.


MFIP, DWP:
The self-employment budget begins in the month of application or in the 1st month of self-employment.

Use a 12-month rolling average to budget monthly income from self-employment.

If a self-employment business has been in operation for at least 12 months, average the monthly self-employment income from the most current income tax report for the 12 months before the month of application. Use this amount to determine the self-employment income to budget for the month of application and the previous 11 months. Each processing month, determine a new monthly average to use in the corresponding payment month. Do this by adding the actual self-employment income and expenses the client reports on the Self-Employment Report Form (DHS-3336) and dropping the 1st month from the averaging period, creating a new 12 month period.

If a business has been in operation less than 12 months, compute the average for the number of months the operation has been in business to determine a monthly average. Use this figure for the number of months the operation has been in business and add each new month's figures until you have a 12-month average.

If the business has a major change, compute a new rolling average beginning with the 1st month of the major change. A major change is one that affects the nature and scale of the business. It is not merely the result of normal business fluctuations. Major change can also be used when a business ends. When the business ends, continue using the new rolling average until the business income ends. Stop counting the self-employment income the payment month after the income ends.

For seasonal self-employment, the caregiver may choose to use the rolling average or actual income and expenses. Under the actual method, count income in the month received and expenses in the month incurred. The caregiver may choose the method at application or the 1st time the unit begins seasonal self-employment. The caregiver may change the method only at recertification. Seasonal self-employment for this purpose means working 6 months or less per year.

For self-employment rental income, the unit must report hours worked each month on the rental property as well as income or expenses on the DHS 3336. Use the rolling average method outlined above to compute the average number of hours worked per month. Use this average to determine whether to count the rental income as earned or unearned. See 0017.15.33.30 (Self-Employment Income From Rental Property).

See 0010.18.09 (Verifying Self-Employment Income/Expenses) for more information on collecting and verifying information used to compute the rolling average. If, at recertification, the client's tax forms or other verification show the client greatly understated the amount of income from self-employment, determine whether a fraud investigation is appropriate.


WB, SNAP:
Compute monthly self-employment income by averaging the income and expenses, regardless of whether the household receives the income monthly or less often than monthly. Use these averages to determine monthly counted self-employment income.

●	If the unit files tax returns, base the average on the most recent tax year’s income. Use the average figure until the client files a new tax return covering a full 12 calendar months. If the unit does not file tax returns, calculate the average using business records.
●	If a self-employment business has been in operation for 12 months or more, average the self-employment income and expenses from the past year. Use the average figure until the client files a new tax return covering a full 12 calendar months. If the unit does not file tax returns, calculate the average using business records.
●	If the self-employment business has been in operation for less than 12 months, average the business income and expenses over the period of time the business has been in operation. Use the average figure until the client files a new tax return covering a full 12 calendar months. If the unit does not file tax returns, calculate the average using business records. Continue to anticipate any changes that will impact the net income.

When business income increases or decreases significantly, anticipate the income and calculate a new average. A significant change is a change that affects the nature or scale of the business, and does not result from normal business fluctuations.


MSA:
For SSI recipients, no county action required.

For non-SSI recipients, due to excess income, follow GA.


GA:
Count the client's income and expenses each month unless the type of self-employment requires using average monthly income or expenses. Do not use the client's tax returns to determine income or expenses. Use the average monthly income and expenses when:

●	The client pays expenses less often than monthly, but receives income monthly. Count the client's income each month. However, average expenses forward over the number of months they cover. Begin with the month the client pays the expense. Do not exceed 12 months.
●	The client does not receive income monthly. Average the income and expenses over the number of months the client earned the income. Budget the income for the number of months used to determine the average.

To average income:

1.	Determine the number of months the income covers. The beginning month is the latest of:

-	The month the person began self-employment.
-	The month following the last self-employment income.
-	If the client was self-employed before applying for this program, the month most recent eligibility began.

Count the month the client receives the income as the last month the income was earned. Do not exceed 12 months.

2.	Determine average income and expenses.

-	Divide the income by the number of months it covers.
-	Divide total expenses paid during the months the income covers by the number of months the income covers.

3.	When the client receives new income, average the income and expenses over the number of months the client earned the income. Add the new amount to the existing budget.

GRH:
Follow SNAP for aged, blind, or disabled clients. Follow GA for all other adults.