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.