The new self-employment rules cover situations where a person just started working or has performed self-employment for less than one year.
Less than one month
When a person has been self-employed less than one month, determine if the self-employed person has received any payments or not.
When the person is self-employed but has not received any pay, do not consider any self-employment income towards the household's eligibility. Use presumptive eligibility to get verification of the first payment.
When the self-employed person has received pay, use the pay that a person has received to anticipate future income. Policy discusses several ways to convert this income verification into the countable amount.
- When a person receives payments on a regular schedule, use the payments and a conversion factor to anticipate income.
- When a person receives payments irregularly, accept the amount already received in the client's first month of self-employment.
- When the client had this same seasonal business the prior year, anticipate income based on the prior year's income records unless it is not representative.
After determining what income the self-employed person can expect to receive in the future, you must determine if that person has business expenses. A client who has self-employment business expenses receives a 50% deduction from their monthly gross income. Subtract 50 % when the client claims or documents expenses.
More than a month
When the self-employed person has worked more than one month but less than one year, follow these instructions.
- Calculate the annual gross self-employment amount by using the client's business records. Usually you will add the amounts received by the client in months since the business opened. Remember, if the income has substantially changed, to use the verification that best reflects the income for the current or future months.
- Ask if there are self-employment expenses. If the client claims business expenses, subtract 50% from the client's gross self-employment income.
- Divide the remaining income by the number of months the client the timeframe the verification covers. Consider the partial first month a person is performing self-employment as a full month when considering how many months a person has worked.
Record how you calculate and document income in case notes.
Kole, aged 43, works as an apprentice carpenter. He applies for Child Care for his seven-year-old daughter Essence on September 9, 2018. Kole began working for Smith Construction on August 27, 2018. He works 40 hours per week at $12 per hour. His manager confirms Kole's schedule will not change. Kole's weekly checks show he earned $480 on August 31 and $475 on September 7. His checks do not show Smith deducting taxes from his pay. Kole reports he is not responsible for any employment-related expenses. What is Kole's countable income?
$2053.25. The gross payment that Kole received on August 27 shows that he received a full check. $480/$12 per hour=40 hours. Since the manager confirms this income will continue, you must use the payments already received to anticipate Kole's future contract income. $480+$475=$955/2=$477.50*4.3=$2053.25.
While on summer vacation from the university, Bradley picks corn at a local farm. The grower pays Bradley cash based on how many bushels he picks daily. Needing child care for his two-year-old son Julien, Bradley applies for Child Care Subsidy on July 1, 2018. Bradley supplies a copy of his 2017 tax return. Bradley reports the tax return shows what he earned from picking corn last year. Bradley expects this job to last around two months and does not report expenses. Last year, Bradley spent 3 months picking corn. The tax return shows he earned $3,000 in 2017. Bradley began picking corn on June 30, 2018 and received his first payment on that day. He expects he will earn about as much as he did last year. What income do you count for Bradley?
$1,000. Bradley is performing seasonal work and is not reporting any substantial changes. Though he just started this employment for this year, use the 2017 tax return to anticipate his monthly earnings. There are no business expenses. $3,000/3 months=$1,000.