1805.030.00 Modified Adjusted Gross Income (MAGI) Methodology

1805.030.25.15 Specific Types of Income

IM-96 July 11, 2022; IM-92 June 18, 2020; IM-103 July 22, 2019; IM-97 November 9, 2015

Use the rules in this section for the specified types of income.

  1. INCOME RECEIVED LESS OFTEN THAN MONTHLY: Annualize income regularly received on a recurring basis less frequently than monthly, such as quarterly payments or annual income, (dividends, etc.).
  2. TIPS: Consider tips received as wages. Actual tips received may differ from tips reported by the employer for tax purposes.
  3. REGULAR PAY DATE NOT OBSERVED: If the participant has regular pay dates, (i.e. Social Security, VA, State Employees, etc.,) but occasionally is paid early or late, consider the income in the month normally received.
  4. CONTRACTUAL INCOME: Prorate earned income received by a participant employed on a contractual basis over the contract period. Use the prorated amount in determining eligibility according to regular budgeting procedures. For school employees under contract to receive annual income in a period less than a year, average the income over a 12-month period. This includes teachers, cooks, janitors, and professional administrative staff. This does not apply to contractual income received on an hourly or piecework basis.
  5. SELF-EMPLOYMENT INCOME: Determine self-employment income using one of the methods outlined below.
    1. For income received monthly, project an average and budget that average monthly (e.g. a hairdresser earns money each month; project an average of the hairdresser’s monthly income and budget).
    2. Add and prorate income received only once per year or sporadically throughout the year to determine a monthly amount (e.g. a farmer who raises and sells various crops, produce, and livestock at different times during the year).
    3. If the participant is self-employed for one year or more, divide annual income by 12 to determine a monthly amount.
    4. If the participant has been self-employed for less than one year, average the amount of self-employment income over the period of time the business has been in operation to determine a monthly amount.
    5. If the monthly amount determined does not reflect the individual’s actual monthly income because of a substantial increase or decrease in business, use a representative period of earnings to determine monthly earnings.
    6. Average income from self-employment using the best information available. This may include, but is not limited to:
      1. Appropriate IRS forms and supporting documentation
      2. Written statements from a CPA with knowledge of the business
      3. Written statements from an attorney who handles the affairs of the business
      4. Other documents that substantiate the income, such as records, receipts, etc.
    7. Negative self-employment income, or self-employment losses, offsets other household income in determining the MAGI for the household members. Losses are commonly found on IRS Form-1040 or IRS Schedule 1 (Form-1040) identified with the sum amount showing in parenthesis and may be found on one of the following lines:
      • IRS Form 1040 – Capital Gain or Loss
      • IRS Schedule 1 – Business Income or Loss
      • IRS Schedule 1 – Other Gains or Losses
      • IRS Schedule 1 – Rental Real Estate, Royalties, etc.
      • IRS Schedule 1 – Farm Income or Loss