Definition of Earned Income

PURPOSE: This rule defines earned income in order to determine when earned income disregards apply in establishing the amount of payment for which the recipient is eligible. (1) In applying the earned income exemptions, as stated in section 209.240, RSMo, to an applicant for, or a recipient of, Supplemental Aid to the Blind and as stated in section 208.010, RSMo for an applicant for or recipient of MO HealthNet for the Aged, Blind, and Disabled (MHABD), the following definition of earned income will be used: (A) The term earned income encompasses income in cash or in kind earned by a needy individual through the receipt of wages, salary, commissions, or profit from activities in which s/he is engaged as a self-employed individual or an employee. The earned income may be derived from his/her own employment, such as business enterprise or farming, or derived from wages or salary received as an employee. It includes earnings over a period of time for which settlement is made at one (1) given time, as in the instance of sale of farm crops, livestock, or poultry. In considering income from farm operation, the option available for reporting under Social Security Disability Income, namely the cash receipts and disbursements method, that is, a record of actual gross, of expenses and of net, is an individual determination and is acceptable also for public assistance. With reference to commissions, wages, or salary, the term earned income means the total amount, irrespective of personal expenses, such as income tax deductions, lunches, and transportation to and from work. With respect to self-employment, the term earned income means the total profit from business enterprise, farming, and the like, resulting from a comparison of the gross income received with the business expenses, that is, total cost of the production of the income. Personal expenses, such as income tax payments, lunches, and transportation to and from work, are not classified as business expenses; (B) The definition shall exclude the following from earned income: Returns from capital investment with respect to which the individual is not him/herself actively engaged, as in a business (for example, under most circumstances, dividends and interest would be excluded from earned income); and benefits (not in the nature of wages, salary or profit) accruing as compensation or reward for service or as compensation for lack of employment (for example, pensions and benefits such as United Mine Worker’s benefits or veterans benefits); and (C) With regard to the degree of activity, earned income is income produced as a result of the performance of services by a recipient; in other words, income which the individual earns by his/her own efforts, including managerial responsibilities, would be properly classified as earned income, such as management of capital investment in real estate. Conversely, for example, in the instance of capital investment where the individual carries no specific responsibility, such as where rental properties are in the hands of rental agencies and the check is forwarded to the recipient, the income would not be classified as earned income. In households where a Supplemental Aid to Blind or MHABD claimant is entitled to an income exemption and where other persons are receiving other types of assistance, the exempted income also shall be disregarded in determining the need of the other persons for public assistance. AUTHORITY: sections 207.022 and 660.017, RSMo 2016.* Original rule filed Sept. 26, 1951, effective Oct. 6, 1951. Amended: Filed Sept. 19, 1961, effective Oct. 13, 1961. Amended: Filed Oct. 1, 1965, effective Oct. 10, 1965. Amended: Filed Sept. 24, 1970, effective Oct. 4, 1970. Amended: Filed Aug. 8, 2018, effective March 30, 2019. Amended: Filed Sept. 6, 2019, effective March 30, 2020. *Original authority: 207.022, RSMo 2014 and 660.017, RSMo 1993, amended 1995.