Self-Employment Income

§         Self-employment income, including rental income, is documented on the participant’s most current tax forms; the pay period is usually annual (quarterly if a profit and loss statement or cash receipts ledger is used).

§         The signed tax forms for the prior year are accepted through January 30th of the program year. After January 30th, the household must provide tax records from the current tax year or the household may provide a profit and loss or cash receipts ledger for the prior three (3) month period (quarter). If a profit and loss statement or cash receipts ledger is used for income verification, business expenses will not be deducted from the business earnings for the period.

§         To calculate the self-employment income from tax forms, complete the self-employment Form HW-0476 (See Appendix B-Forms) as follows:

§         Using the participant's IRS 1040, transfer the amounts reported for wages, interest, dividends, etc. to the corresponding line on form HW 0476 - Self-Employment Verification for Participant

§         Total the amounts on lines 1 – 8 and enter the result on line 9.

§         From the reporting schedule for the type of business (i.e. Schedule C, Schedule F, etc.) record the NET income or loss on the corresponding lines 10 – 12 on HW 0476.

§         Total the amounts on lines 10 – 12 and enter the result on line 13.

§         Using the same Schedule (C, E or F), enter the amount of depletion or depreciation on the appropriate lines 14 – 17 on the form HW 0476.

§         Total the amounts on lines 14 – 17 and enter the result on line 18.

§         ADD lines 13 and 18. Put the total on line 19. If the total is zero (0) or less, enter zero (0) on line 19.

§         Add the totals on lines 9 and 19. Enter the sum on line 20. If the total is less than zero (0), enter zero (0) on line 20.

§         The amount on line 20 is the annual income.

§         Divide line 20 by 4 to arrive at the three (3) month self-employment income and enter this number on line 21.

§         The participant and the DSP representative must sign the self-employment verification form.

§         All related tax forms used to calculate the income on the self-employment form must be included in the participant’s file.

§         Any additional earned income not included on the tax forms must be verified separately and included on the “Income Data Section” of the application to arrive at the household’s total gross income.

§         If the participant is using a Form 1065 (U.S. Return of Partnership Income), the income that is listed on the Self-Employment Form HW-0476 (See Appendix B-Forms) is found on line 22. If the amount is a negative number, the income is zero.