Calculation Of Self-Employment Income

The Department calculates self-employment income by adding monthly income to capital gains and subtracting a deduction for expenses as determined in Subsection 231.03 of this rule. (3-17-22) 01. How Monthly Income is Determined. If no income fluctuations are expected, the average monthly income amount is projected for the certification period. If past income does not reflect expected futur e income, a proportionate adjustment is made to the expected monthly income. (3-17-22) 02. Capital Gains Income. Capital gains include profit from the sale or transfer of capital assets use d in self-employment. The Department calculates capital gains using the federal income tax method. If the househol d expects to receive any capital gains income from self-employment assets during the certification period, this amoun t is added to the monthly income, as determined in Subsection 231.01 of this rule, to determine the gross monthl y income. (3-17-22) 03. Self-Employment Expense Deduction. The Department uses the standard self-employmen t deduction in Subsection 231.03.a. of this rule, unless the applicant claims that their actual allowable expenses excee d the standard deduction and provides proof of the expenses described in Subsection 231.03.b. of this rule. (3-17-22) a. The self-employment standard deduction is determined by subtracting fifty percent (50%) of th e gross monthly self-employment income as determined in Subsections 231.01 and 231.02 of this rule; or (3-17-22) b. The self-employment actual expense deduction is determined by subtracting the actual allowabl e expenses from the gross monthly self-employment income. The following items are not allowable expenses and ma y not be subtracted from the gross monthly self-employment income: (3-17-22) i. Net losses from previous tax years; (3-17-22) ii. Federal, state, and local income taxes; (3-17-22) iii. Money set aside for retirement; (3-17-22) iv. Work-related personal expenses such as transportation to and from work; and (3-17-22) v. Depreciation. (3-17-22)