To simplify the process of determining self-employment income for partnerships within the ABD (Aged, Blind, Disabled) program, you can break the instructions down into a clear “First Step” check followed by a simplified workflow for non-SSI recipients.

1. The Initial Check: Does the Client Receive SSI?

Before reviewing complex tax forms, determine if the client receives any amount of Supplemental Security Income (SSI).

• If YES: You must count the same income and apply the same deductions that SSI used.
• Where to look: Use the income listed in Block 16 (Earned Income).
• Note: This figure already reflects countable earned income after business expenses have been subtracted.

2. Handling Non-SSI Recipients

If the client does not receive SSI, follow these steps to verify their partnership income:

Understand the Partnership

• Definition: A partnership is a business relationship between two or more people who share money, labor, or skills to run a trade or business.
• Profit/Loss: Partners agree to share in both the profits and the losses of the business.
• Taxes: The partnership itself is not taxed. Instead, each partner reports their specific share of the income or loss on their personal tax return.

Required Documentation

To verify income, you must collect the following documents from the client:

• Personal Tax Return: Used to verify how profits are shared.
• Schedule K-1 (Form 1065 or Form 8865): This is the primary form used to identify the individual partner’s share.

The Worker’s Main Task

Your primary responsibility is to determine what portion of the partnership belongs to the client.

• Action: Review the percentage owned by the client as shown on the Schedule K-1.