SELF-EMPLOYMENT BUDGETING

The self-employment budget period begins in the month of application or in the 1st month of self-employment. Applicants and participants must choose 1 of the methods described below for determining self-employment earned income. Self-Employment expenses are not used in the budgeting calculation, unless there is a program provision.

SELF-EMPLOYMENT INCOME CALCULATION

The agency must determine self-employment income based on client choice for each self-employment business. Clients may choose either method, if taxes were filed within the last 12 months.

Participants must continue to use the same method for each self-employment income source, regardless of whether they apply for a new program, unless they meet 1 of the conditions of changing options listed under program provisions below.

●	50% of gross earnings from self-employment.

	- As determined by business records or self-employment form.
	- Gross earnings are defined as earned income before taxes and deductions.
	- This method is based on using current income to calculate self-employment income.
	- Document the calculation and which option the applicant or participant has chosen in CASE/NOTEs

OR

●

Taxable Income.

-	As determined from an Internal Revenue Service (IRS) tax forms that has been filed with the IRS within the last 12 months.
-	Taxable Income means “Net profit” from the applicable annual tax forms.
-	Divide the “Net profit” by 12 months to find the monthly average income for the year. If the business has been operating for less than 12 months, then divide by the number of months the business has been operating.
-	This method is based on using an annual average to calculate self-employment income.
-	Document the calculation and which option the applicant or participant has chosen in CASE/NOTEs.

MFIP, DWP:
Self-Employment Hours: Only the hours the participant earns the federal minimum wage count toward the participation requirements. The number of self-employment hours is determined by dividing the net self-employment income by the federal minimum wage.

Changing Options:

Participants must be given the option to change their method of self-employment income calculation at recertification.

Participants who use the 50% of current self-employment income method, may choose the Taxable Income method at the next benefit month.

Participants who use the Taxable Income method, must continue to use this method until recertification, unless there is an unforeseen significant change. An “Unforeseen Significant Change” means a decrease in income, where their income decrease was equal to or greater than the earned income disregard from the income used to determine the benefit for the current month, and this decrease was unpredictable.


SNAP:
Self-Employment situations that have a farm loss offset DO NOT have the choice of the 50% of gross earnings or the tax method to calculate Self-Employment income for any unit member’s self-employment business. See the SNAP Farm Loss Offset Policy Guide (PDF).

Calculate Rental Income using the information in 0017.15.33.30 (Self-Employment Income From Rental Property) to determine earned versus unearned income. Count income from rental property as earned income when the unit spends an average of 20 hours or more per week maintaining or managing the property, otherwise count it as unearned income.

Changing Options:

Participants must be given the option to change their method of self-employment income calculation at recertification.

Participants, who use the 50% of current self-employment income method, may choose the Taxable Income method at the next benefit month.

Participants, who use the Taxable Income method, must continue to use this method until recertification.


MSA:
For SSI recipients, no county action required.

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


GA:
Changing Options

Participants must be given the option to change their method of self-employment income calculation at recertification.

Participants, who use the 50% of current self-employment income method, may choose the Taxable Income method at the next benefit month.

Participants, who use the Taxable Income method, must continue to use this method until recertification, unless there is an unforeseen significant change. An “Unforeseen Significant Change” means a decrease in income, where their income decrease was equal to or greater than the earned income disregard from the income used to determine the benefit for the current month, and this decrease was unpredictable.


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