Library: Policy

OKDHS:10-1-15. Determination of earned income

Issued 4-1-98

     Earned income results from self-employment or other employment sources.

• (1) Earned income from self-employment. If the income results from the individual's activities primarily as a result of the individual's own labor from the operation of a business enterprise, the "earned income" is the total profit after deducting the business expenses (total cost of the production). Money from the sale of whole blood or blood plasma is also considered as self-employment income subject to necessary business expense and appropriate earned income disregards found in OAC 340:10-3-33.
  • (A) Cost of producing self-employment income. Allowable costs of producing self-employment include, but are not limited to, the identifiable cost of labor, stock, raw material, seed and fertilizer, interest payments to purchase income-producing property, insurance premiums, and taxes paid on income-producing property.
    • (i) The federal or state income tax form for the most recent year is used for calculating the income only if it is representative of the individual's current situation. The individual's business records beginning the month income became representative of the individual's current situation is used if the income tax information does not represent the individual's current situation.
    • (ii) If the household's self-employment enterprise has been in existence for less than a year, the income is averaged over the period of time the business has been in operation to establish the monthly income amount.
    • (iii) Self-employment income which represents a household's annual support is prorated over a 12-month period, even if the income is received in a short period of time. For example, self-employment income. received by crop farmers is averaged over a 12-month period if the income represents the farmer's annual support.
  • (B) Items not considered. The following items are not considered as a cost of producing self-employed income:
    • (i) The purchase price or payments on the principal of loans for capital assets, equipment, machinery, and other durable goods;
    • (ii) Net losses from previous periods;
    • (iii) Depreciation of capital assets, equipment, machinery, and other durable goods; and
    • (iv) Federal, state and local income taxes, FICA, money set aside for retirement purposes, and other work related personal expenses, such as meals and necessary transportation. These expenses are accounted for by the work related expense deduction given in OAC 340:10-3-33(1).
  • (C) Room and Board. Earned income from a room rented in the home is determined by considering as business expenses 25% of the gross amount received. Earned income from room and board paid by a person in the home is determined by considering as a business expense, 50% of the gross amount received.
  • (D) Rental property. Income from rental property is to be considered income from self employment if none of the activities associated with renting the property is conducted by an outside-person or agency. (See OAC 340:10-3-39 to determine how income in this subparagraph is considered.)
• (2) Income from sources other than self-employment. Income from sources other than self-employment is given in (A) - (8) of this paragraph.
  • (A) Earned income from wages, salary or commission. If the income is from wages, salary or commission, the "earned income" is the gross income or "true wage" prior to payroll deductions and/or withholdings.
  • (B) Earned income from work and training programs. Earned income from work and training programs is given in (i) - (iv) of this subparagraph.
    • (i) Job Training Partnership Act (JTPA). JTPA earned income received by an adult as wages is considered as any other earned income. Also, JTPA earned income of a dependent child is considered when received in excess of six months in any calendar year.
    • (ii) Education, Training, and Employment (ET&E). Earned income from regular employment for on-the-job training is considered as any other earned income.
    • (iii) Job Training Partnership Act (JTPA). JTPA earned income received by an adult as wages is considered as any other earned income. Also, JTPA earned income of a dependent child is considered when received in excess of six months in any calendar year.
    • (iv) Education, Training, and Employment (ET&E). Earned income from regular employment for on-the-job training is considered as any other earned income.