Self-employed persons must verify their income. The verification that applicants or recipients submit depends on whether they filed a federal tax return that reflects their self-employment income.
Filed federal tax return
Once a person files a federal tax return, obtain a copy of his or her tax return, and use the gross self-employment income to calculate the client’s income. This rule applies regardless of whether the client works for an employer or themselves. You may consult this chart to determine how to locate gross self-employment income information on the federal tax return.
Not filed taxes
When a person’s tax return does not reflect the self-employment income, you must use the available business records to document the self-employment income. Obtain the most recent 12 months of income verification available.
If the client began their self-employment in the last year, they must provide income verification from when self-employment began until the present month.
- For those working for themselves, this verification consists of up to the most recent 12 months of business records.
- For those working for an employer, use verification of the person’s gross pay amounts from up to the most recent 12 months.
If there are no business or employment records, ask the client to estimate his or her income. The client must start keeping a record of his or her income going forward.
Substantial Change Exception
The only exception occurs when a person’s situation has substantially changed. Use the income verification that best predicts the client’s current or future income when a person experiences a substantial change.