Temporary Assistance/Case Management Manual

0210.015.25 Overhead Expense of Producing Income

IM-49 July 1, 2009, IM-01 January 3, 2005

Depending on the source of income, certain overhead expenses exist. Budget these expenses on an as-paid basis. IN NO CASE MAY THE EXPENSES OF PRODUCING INCOME FROM A GIVEN SOURCE EXCEED INCOME FROM THAT SOURCE.

EXAMPLE: Include overhead expenses in the budget for a farmer who earned income from his farming operation. However, if overhead expenses exceed gross income from farming operations, only show the overhead expenses up to the gross farm income. Other income, such as OASDI, has no bearing on this determination.

Consider and subtract the following overhead expenses from gross income to determine the adjusted gross income:

(Purchase of capital equipment and payments on the principal of loans for capital assets or durable goods are not allowable business expenses for Temporary Assistance.)

  1. Boarders: For food, current maximum one person food stamp allotment per boarder.
  2. Sales: Cost of operating a vehicle (current state reimbursement rate), cost of supplies (as paid).
  3. Job-related Costs: For the person furnishing his/her own tools, equipment, transportation, etc. The cost, as paid, is allowed as a deduction.
  4. Farm Income: Cost of feed, seed, fertilizers, tools, equipment repair and replacement, labor, operating farm machinery, shipping costs, custom work, land rental or ownership costs (as paid).
  5. Business Income: Costs of tools; equipment repair and replacement; labor; operating equipment; purchase of materials, supplies, or stock of goods; rental or ownership costs and utilities on separate business establishment; subcontracting (as paid).
  6. Income Producing Property: Cost of ownership (interest on a mortgage or contract payment, taxes, insurance, repairs) utilities, labor, supplies (as paid).
  7. Babysitting Income: If a person in the assistance group babysits in his/her home and provides meals for the child(ren), allow an expense of producing income for the meals provided (ML). Use $1 per meal or actual verified expenses.
  8. Cost of meals for potential customers (ML).

The following expenses are not allowable when determining self-employment income:

  1. Depreciation;
  2. Personal business and entertainment expenses;
  3. Personal transportation;
  4. Purchase of capital equipment; and
  5. Payments on the principal of loans for capital assets or durable goods.
  6. Cost of meals for EU members (MN).

Use the same method for converting to monthly amounts as is used for income.