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.
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- 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.).
- TIPS: Consider tips received as wages. Actual tips received may differ from tips reported by the employer for tax purposes.
- 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.
- 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.
- SELF-EMPLOYMENT INCOME: Determine self-employment income using one of the methods outlined below.
- For income received monthly, project an average and budget that average monthly. For example, a hairdresser earns money each month. Project an average of the hairdresser’s income and budget that average monthly.
- Add and prorate income received only once per year or sporadically throughout the year to determine a monthly amount. EXAMPLE: A farmer raises various crops, livestock, etc. He/She sells produce and livestock at different times during the year.
- If the participant is self-employed for one year or more, divide annual income by 12 to determine a monthly amount.
- 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.
- 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.
- Average income from self-employment using the best information available. This may include, but is not limited to:
- Appropriate IRS forms and supporting documentation;
- Written statements from a CPA with knowledge of the business;
- Written statements from an attorney who handles the affairs of the business; or
- Other documents that substantiate the income, such as records, receipts, etc.
- 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 Schedule (1) for Form-1040 identified with the sum amount showing in parenthesis () and may be found on one of the following lines:
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- Line 3 from IRS Schedule 1 – Business Income or Loss;
- Line 6 from IRS Form 1040 – Capital Gain or Loss;
- Line 4 from IRS Schedule 1 – Other Gains or Losses;
- Line 5 from IRS Schedule 1 – Rental Real Estate, Royalties, etc.;
- Line 6 from IRS Schedule 1 – Farm Income or Loss; and
- Line 11b from IRS Form 1040 – Taxable Income
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