Aged, Blind, Disabled (ABD): Income – How to Code Self-Employment (Sole Proprietorship)

Self-proprietorship (one or more people own and run the business) is the most common type of self-employment.

  1. Business income
    • If the client is on SSI, you can take a verbal statement from the client on the business income and expenses
    • For all other clients, business income and expenses must be verified
      • ABD policy requires the use of actual business expenses (do not apply SNAP policy to ABD benefits)
      • If the company has filed taxes, ask for the business tax form, especially the Schedule C. When Oklahoma became an SSI Criteria State, we could use all the business expenses reported on the Schedule C. Annualize the amounts in these blocks
        • Business Income: Line 7
        • Business Expenses: Line 28
      • If there is no tax form to use, client must report the following for each month that either business has existed or the previous 12 months (do this if the client reports the business has taken a downturn since last tax filing):
        • Business income
        • Itemized business expenses (we allow every expense the IRS allows)
        • Calculate average monthly business income and resources
  2. Subtract average monthly expenses from monthly income
  3. Use all the applicable earned income deductions (See Computation of Earned Income or SSI-Criteria State Order of Deductions for Earned Income
  4. FACS – Average monthly business income goes in the “Monthly Self-Emp Income” block and the average monthly expenses go in the “Monthly Business Expense” block.

Example 1:

Andrew is receiving Social Security Disability whose case is up for review. Five months ago, his wife Rachel started a business growing organic vegetables then selling them at the local Farmer’s Market. She provides the following for her business.

Month 1 Income: $0 Expenses: Expenses: $31.35-seeds, $35-water, $423-gardening tools, $47.24-organic fertilizer, $120-4 chickens, $242.75-chicken coop, $15-chicken feed, $80-organic pest control soap, $650–fence and chicken wire
Month 2 Income: $0 Expenses: $35-water
Month 3 Income: $0 Expenses: $35-water, $47.24-organic fertilizer, $15-chicken feed
Month 4 Income: $0 Expenses: $35-water
Month 5 Income: $530 Expenses: $80-booth fee, $35-water, $15-chicken feed, mileage-$5.45
Average monthly business income:
$0+$0+$0+$0+$530 = $530 / 5 = $106
Average monthly expenses:
$1644.34+$35+$97.24+$35+$135.45=$1947.03/5=$389.41
Countable earned income:
$106 – $389.41 = $0

Income can’t be reduced to less than $0 so FACS is coded with $106 business income and $106 business expense.

Example 2:

John Tyler receives RSDI of $670. He has a lawn mowing business. He provided his tax form (Schedule C).

John Tyler’s tax form displays a business income of $14035. (Line 7)

John Tyler’s tax form displays business expenses of $5546.09.

Annualized business income:
$14035 / 12 = $1169.58
Annualized business expenses:
$5546.09 / 12 = $462.17
Net business income:
$1169.58 – $462.17 = $707.41
Countable self-employment income:
$707.41 – $20 = $687.41 – 65 = $622.41 / 2 = $311.21
Total countable income:
$670 + $311 = $981

John’s income is coded in FACS as shown here:

Non-TANF Work Expense:
$311+$65 = $376

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