6313 Self-Employment - Self-employment income is earned income received directly from one's own business, trade, or profession. Some guidelines to determine if an individual is self-employed include whether the person: (1) holds himself out as a business (e.g., advertises), (2) decides when and where to work, obtains own jobs or sales, and pays own expenses, (3) has a risk of a profit or loss, and (4) pays his own FICA and income taxes (although this guideline, by itself, does not necessarily establish self-employment). The absence of one or more of these criteria indicate that the activity is not self-employment. Each situation must be evaluated on a case-by-case basis and documented in the case file as to whether a certain income is self-employment or not. An adjusted gross income amount must be determined by deducting income producing costs from the gross earnings.
Ownership of rental property and
other income-producing personal property (other than cash assets)
shall be considered a self-employment enterprise; however, income
derived from the property shall be considered self-employment earned
income only if a member of the household is actively engaged in the
production of income and/or the management of the property at least
an average of 20 hours per week. Otherwise it will be considered unearned
income. See 5430 (12) regarding treatment
of income producing property.
NOTE: For all programs, net countable income from this property,
whether earned or unearned, shall be determined using the 25% standard
deduction or actual expenses if requested. See 7122.1.
A loss from self-employment cannot
be deducted from other income nor can a net loss of a business be
considered as an income producing cost. Exception: For food assistance,
a loss from farm self-employment can be deducted from other countable
income. See 7122.1.
When at least one person has wages
and at least one person is self-employed, separate calculations are
required and the countable incomes are then totaled. Self-employment
income shall be considered and averaged. (See 7122.)
Payments from a roomer or boarder
shall be treated as though it were self- employed earned income. See
4222 for Allowable Costs of Doing
Business for food assistance boarders. See 7122.1
for allowable cost of doing business (25% or actuals) for a roomer.
Definitions of roomer and boarder are in Appendix
item X-6.
Payments to family or group day care providers through the Child Care Food Program, authorized by the National School Lunch Act shall be considered gross self-employment income from which the costs of doing business may be subtracted to determine net income. Included in the cost of doing business are the food expenses incurred by the day care providers to feed children under their care. Child care providers may also qualify to receive payments through this program for meals provided to their own children. These payments are also income from which the cost of providing meals may be deducted. The Child Care Food Program funds are administered by the State Department of Education and distribution to eligible day care providers is made through sponsoring organizations. Refer to item D-1 in the Appendix for the current list of sponsoring organizations.