To simplify self-employment income for Sole Proprietorships (the most common type of self-employment), the process is divided by whether the client receives SSI and which tax forms or records are available.
Clients Receiving SSI
For any client receiving Supplemental Security Income (SSI), workers must follow the Social Security Administration’s determination:
- Source: Use the income shown in Block 16: Earned Income.
- Calculation: This figure already accounts for all business expenses and deductions applied by SSI.
- Verification: You may take a verbal statement from the client regarding business income and expenses.
Clients NOT Receiving SSI
For all other clients, business income and expenses must be verified using the following methods:
Method A: Using Tax Forms (Preferred)
If the business has filed taxes, use Schedule C to annualize the amounts:
- Business Income: Use Line 7.
- Business Expenses: Use Line 28.
- Note: Use all business expenses reported on Schedule C.
Method B: No Tax Forms or Business Downturn
If no tax forms exist, or the client reports a significant downturn since the last filing, request records for the previous 12 months (or the duration of the business):
- Collect: Monthly business income and itemized expenses.
- Calculate: Determine the average monthly income and average monthly expenses.
- Subtract: Average monthly expenses from average monthly income.
- Policy: Use actual business expenses; do not apply SNAP policy to ABD benefits.
Coding in FACS
When entering data into the system, follow these rules for countable earned income:
- Income Minimum: Countable income cannot be reduced to less than $0.
- Matching Values: If expenses exceed income, code both the business income and business expense fields with the same amount (the total income amount) to result in $0.
Example Calculation:
- Avg. Monthly Income: $106
- Avg. Monthly Expenses: $389.41*Countable Income: $0 (Since $106 – $389.41 is negative) *FACS Coding: Enter $106 for income and $106 for expenses.
Summary Checklist for Workers
| If the client… | Then do this… |
| Receives SSI | Use Block 16: Earned Income (Verbal Statement okay).
|
| Has Filed Taxes | Use Schedule C: Line 7 (Income) and Line 28 (Expenses).
|
| Has No Tax Forms | Average 12 months of income and itemized expenses.
|
| Has Negative Profit | Code income and expenses as equal amounts in FACS.
|
Comments or Suggestions?
We want Quest to be your source for important information that you need to succeed at in your work but we need your help:
Was this article helpful? Was it missing something you needed to get the job done?
Tell us what you think, what you know about this article. What are we doing well, and what we could do better.
All fields are required.