HAR §17-1724.1-24. Self-employment earned income

(a) Self-employment earned income is income received by an individual who: (1) Sells a service or product for a profit; 1724.1-7 3 20 6 §17-1724.1-24 (2) Is independently responsible for obtaining or providing a service or product; (3) Has independent costs and expenses necessary to provide a service or product; (4) Determines independently the manner, method, and process of business operations; and (5) Is independently responsible for the suc~ess or failure of the business operation. (b) Self-employment earned income shall be determined by deducting ordinary and necessary business expenses directly related to producing goods or services from the gross income amount received from the sale of the goods or services. (c) Only verified documentation of business expenses shall be deducted from the gross self- employment income. Verified business expenses include, but are not limited to, expenses that are listed on a profit and loss statement, itemized receipt, or billing statement such as: (1) Costs of the product or raw materials, (2) ( 3) ( 4) including shipping and storage costs; Factory overhead expenses; Employee wages; and Costs related to property used for the business, including rent, utilities, repairs, mortgage interest, taxes, and insurance. (d) Expenses that are not allowed as deductions include, but are not limited to: (1) Depreciation and depletion; (2) Personal business expenses such as lunches, transportation to and from work, and entertainment expenses; (3) Purchase of capital equipment; and (4) Payments on the principal of loans for capital assets or durable goods. (e) An individual who does not meet the self- employment requirements specified in subsection (a) , shall not be allowed to d~du 1 ct business expenses . [Eff 09/30/13; am and comp NUV 0 2016 ] (Auth: HRS §346- 53; 20 C.F.R. §§416.1110, 416.1111; 42 C.F.R. §§435.601, 435 . 631) (Imp: HRS §§346-14, 346-29; 20 C.F.R. §§416.1110, 416.1111; 42 C.F.R. §§435.601, 435.631) 1724.1-8