3-002.04B1 Averaged Self-Employment Income

475 NAC 3-002.04B1

The worker divides the gross income from self-employment including capital gains after subtracting the costs of doing business over the months the income is intended to cover. If there is more than one source of self-employment for the household, the worker subtracts the allowable costs of self-employment from the total self-employment of that household.

Procedures for averaging self-employment income:
1. For households using a tax return and the "1040 Supplement," use the "Self-Employment/Farm Guide (using IRS tax returns)" from the FSP Best Practices Log. Complete or address all lines of the guide.
2. For households using ledgers, use the "Computation Guide for Self-Employment Ledger" from the Best Practice Log. Completion of this computation document will 'track' the 12-month rolling average.
3. Add the result from #1 or #2 above to other income and continue the computations.
4. If the result is a negative amount in either #1 or #2, it can only be offset against other self-employment income. When the self-employment income is from a farming operation, it can be offset against other income of any type.
5. Any deduction taken in the process of determining self-employment income must not be taken a second time when continuing computations. An example of this type of deduction would be business use of the home and considering part of the shelter as a cost of doing business.

3-002.04B1a Special Procedures for Farming Self-Employment Income

{9/4/2002}