SUBJECT:
INCOME EXPENSE CODES IN FAMIS
FOOD STAMP MANUAL REVISION #22
1115.040.00
1115.040.01
1115.040.05
1115.040.10
1115.040.15
1115.040.25
1115.040.30
1115.045.00
DISCUSSION:
Effective October 8, 2006, changes are made in FAMIS regarding income expenses codes. Due to a suggestion from county staff, the income expense codes were revised and new ones added to align the codes with expenses shown on the IRS tax documents. Income expenses are entered on the Income Expense (FMX1) screen. This memorandum addresses the following issues related to these changes.
- New income expense codes;
- Description changes of existing income expense codes; and
- Food Stamp Manual revision.
FAMIS determines if the income expense is included or excluded for each program according to the following chart.
| Income type |
Income source |
Expense | Expense description |
Food Stamp |
Temporary Assistance |
Child Care |
|---|---|---|---|---|---|---|
| EI | CC | CB | Contract labor | Include | Include | Include |
| EI | CC | EB | Employee benefits | Include | Include | Include |
| EI | CC | PE | Pension plan for employees | Include | Include | Include |
| EI | FA | CH | Chemicals | Include | Include | Include |
| EI | FA | CU | Custom hire | Include | Include | Include |
| EI | FA | EB | Employee benefits | Include | Include | Include |
| EI | FA | FD | Feed purchase | Include | Include | Include |
| EI | FA | FR | Fertilizer/lime | Include | Include | Include |
| EI | FA | PE | Pension plan for employees | Include | Include | Include |
| EI | FA | SP | Seeds/plant purchase | Include | Include | Include |
| EI | FM | CH | Chemicals | Include | Include | Include |
| EI | FM | CU | Custom hire | Include | Include | Include |
| EI | FM | EB | Employee benefits | Include | Include | Include |
| EI | FM | FD | Feed purchase | Include | Include | Include |
| EI | FM | FR | Fertilizer/lime | Include | Include | Include |
| EI | FM | PE | Pension plan for employees | Include | Include | Include |
| EI | FM | SP | Seeds/plant purchase | Include | Include | Include |
| EI | RE | CB | Contract labor | Include | Include | Include |
| EI | RE | EB | Employee benefits | Include | Include | Include |
| EI | RE | PE | Pension plan for employees | Include | Include | Include |
| EI | SE | CB | Contract labor | Include | Include | Include |
| EI | SE | DP | Depletion | Exclude | Exclude | Exclude |
| EI | SE | EB | Employee benefits | Include | Include | Include |
| EI | SE | PE | Pension plan for employees | Include | Include | Include |
| UI | RN | CB | Contract labor | Include | Include | Include |
| UI | RN | EB | Employee benefits | Include | Include | Include |
| UI | RN | PE | Pension plan for employees | Include | Include | Include |
The new income expense codes align FAMIS with the current IRS forms. Request the entire income tax record to determine income and expenses from self employment income.
Description Changes of Existing Income Expense Codes
The following income expense codes are changed.
| Code | Old description | New description |
|---|---|---|
| BM | Books/materials/supplies | Books/materials/supplies (student) |
| CE | Conservation efforts | Conservation efforts and expenses |
| CO | Commissions | Commissions and fees |
| CV | Cost of operating vehicle | Cost of vehicle operation (gas, oil, etc.) |
| FL | License/fees/dues for legal & professional services | License/fees/dues (to maintain a business) |
| IC | Insurance cost | Insurance cost (other than health) |
| LR | Land rental/ownership cost | Land rental/ownership cost (pastures) |
| LW | Labor wage salary ret plan subcontr cost | Labor wage and salary |
| MF | Management fees | Management fees (ofc. fees & invest. prop.) |
| ML | Meals | Meals (entertainment) |
| RT | Rent | Rent (equipment, land, animals, etc.) |
| SF | Shipping/freight costs | Shipping/freight cost/trucking |
| TC | Transportation costs | Transportation costs (farm machinery) |
| TO | Transportation on the job | Transportation on the job (mileage) |
| TX | Taxes | Taxes (business assets, SS, etc. for labor) |
The Food Stamp Manual section discussing income expenses is revised. The revisions include a new section, matching codes with expenses, adding FAMIS procedures, and format changes.
Section 1115.040.01 Partnerships, S Corporations, and Corporations, has been added to provide clarification for budgeting income and expenses. Additional information concerning the appropriate Internal Revenue forms required to verify the income and expenses of each type of self-employment situation are listed.
Partnerships
In a Partnership each partner shares equally the profits and losses of the business. Each partner reports his/her share of the business's profits and losses on his/her individual tax return. Common forms used to verify this type of income are the 1040 - U.S. Individual Income Tax Return, 1065 - U.S. Return of Partnership Income, and Schedules K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. and D (Form 1065) Capital Gains and Losses.
S Corporations
In an S Corporation each owner has limited liability. The owners are considered employees of the company and are not considered self-employed. They are not entitled to the costs of producing income. Common forms used to verify this type of income are the 1040 - U.S. Individual Income Tax Return, 1120S - U.S. Income Tax Return for an S Corporation, and Schedules K (Form 1120S) Shareholder's Share of Income, Deductions, Credits, etc. (Schedule K is a section on the 1120S - U.S. Income Tax Return for an S Corporation.) and K-1 (Form 1120) Shareholder's Share of Income, Deductions, Credits, etc.
Corporations
In a Corporation, the owner is considered an employee of the corporation and receives a salary. The Corporation pays taxes on profits left after salaries, overhead, and expenses are paid. Self-employment expenses are not allowed. Common forms used to verify this type of income are the 1040 - U.S. Individual Income Tax Return, 1120 - U.S. Corporation Income Tax Return, 1120A - U.S. Corporation Short Form Income Tax Return, and Schedule D (Form 1120) Capital Gains and Losses.
Section 1115.040.15 Computing Averaged Self-employment Income is revised to include the procedures for entering income in FAMIS.
Section 1115.040.25 Expenses of Producing Self-employment Income is revised to include the codes for each type of income expense and the procedures for entering expenses in FAMIS.
Section 1115.040.30 Non-Expenses of Producing Self-employment Income is revised to include the code DP (Depletion) as a non-expense. Depletion is the using up of natural resources by mining, quarrying, drilling, or felling. This deduction allows an owner to be compensated for the resource that has been used up and cannot be used again to produce income. Depletion is not allowed as an expense for food stamps, Temporary Assistance or Child Care.
Section 1115.045.00 Investment Property Income is revised to include the codes for each type of income expense associated with rental income.
NECESSARY ACTION:
- Review this memorandum with appropriate staff.