(A)
How is self-employment income determined?
(1)
Averaging self-employment income
(a)
Self-employment income
must
is to be averaged
over the period the income is intended to cover, even when the assistance group
receives income from other sources. When the averaged amount does not
accurately reflect the assistance group's actual circumstances because the
assistance group has experienced a substantial increase or decrease in
business, the county agency
must
is to calculate the self-employment income on the
basis of anticipated, not prior, earnings. When possible the county agency
should secure a copy of the self-employed individual's tax return. The income
listed on the previous year's tax return should be used to estimate the
expected earnings.
The internal revenue service (IRS) publications: IRS
publications 17, "Your Federal Income Tax"; and 334, "Tax Guide for Small
Business"; provide detail on how self-employment income is handled for federal
income tax purposes and can be accessed on the IRS website
http://www.irs.gov.
(b) When the assistance group's
self-employment enterprise has been in existence for less than a year, the
income from the self-employment enterprise must
is to be averaged
over the period of time the business has been in operation and the monthly
amount projected for the coming year.
(2) Calculating monthly self-employment
income
For the period of time over which self-employment income is
determined the county agency shall
is to:
(a)
Add all gross self-employment income (either actual or anticipated as provided
in paragraph (A)(1) of this rule) and capital gains (as provided in paragraph
(B)(2) of this rule); then,
(b)
Exclude the costs of producing the self-employment income (as determined in
paragraph (C) of this rule); and
(c) Divide the remaining amount of the
self-employment income by the number of months the income will be
averaged.
(3) Offsetting
farm income losses
When the cost of producing self-employment income exceeds the
income earned from self-employment, those losses shall
are to be
prorated in accordance with paragraph (A)(1) of this rule and then offset
against countable income to the assistance group as follows:
(a) Offset farm self-employment income losses
first against other self-employment income.
(b) Offset any remaining farm self-employment
losses against the total amount of earned and unearned income after the earned
income deduction has been applied.
(B) What are other income producing
categories of self-employment?
(1) Income from
rental property
(a) Income derived from
rental property is considered earned income for the twenty per cent earned
income deduction only when a member of the assistance group is actively engaged
in the management of the property at least an average of twenty hours per week.
Regardless, income from rental property always has the costs of doing business
excluded.
(b) When management of
the property for at least an average of twenty hours per week is not met, the
net income is considered unearned income and the earned income deduction is not
allowed.
(2) Capital
gains
(a) The term "capital gains" as used by
the internal revenue service (IRS) describes the handling of the profit from
the sale or a transfer of capital assets used in a self-employment enterprise
or securities, real estate, or other real property held as an investment for a
set period of time.
(b) The
proceeds from the sale of capital goods or equipment shall
is to be
calculated in the same manner as a capital gain for federal income tax
purposes. Even when only fifty per cent of the proceeds from the sale of
capital goods or equipment is taxed for federal income tax purposes, the county
agency must
is
to count the full amount of the capital gain as income for supplemental
nutrition assistance program (SNAP) purposes.
(c) For assistance groups whose
self-employment income is calculated on an anticipated (rather than averaged)
basis in accordance with paragraph (A) of this rule, the county agency
shall
is to
count the amount of the capital gains the assistance group anticipates
receiving during the months the income is being averaged.
(d) Lump sum payments for the sale of
property not connected with a self-employment enterprise will be treated in
accordance with rules
5101:4-4-07 and
5101:4-4-13 of the
Administrative Code.
(C) What business costs are allowed to be
deducted when determining self-employment net income?
The assistance group
county agency may choose one of the following two
methods:
(1) Fifty per cent standard
deduction from gross self-employment income; or
(2) Actual deductions from the gross
self-employment income.
(a) Allowable costs
include but are not limited to:
(i)
Identifiable costs of labor;
(ii)
Stock;
(iii) Raw
material;
(iv) Seed and
fertilizer;
(v) Payments on the
principal of the purchase price of income-producing real estate and capital
assets;
(vi) Equipment, machinery
and other durable goods;
(vii)
Interest paid to purchase income-producing property;
(viii) Insurance premiums;
(ix) Taxes paid on income producing
property;
(x) When the assistance
group can document the costs on the portion of a home used in a self-employment
enterprise are separate and identifiable, those costs may be included as costs
of doing business.
(xi) The cost of
doing business for boarders who are not included in the assistance group
shall
is to be
considered in accordance with rule
5101:4-6-03 of the
Administrative Code.
(xii) Business
transportation costs. Use actual costs or the federal or state mileage
reimbursement rate, whichever is higher. For example, when an individual drives
to different work locations throughout the work day, the transportation costs
to drive from one work location to the next work location would be allowable
business transportation costs.
(b) Unallowable costs include but are not
limited to:
(i) Net losses from previous
periods;
(ii) Federal, state, and
local income taxes;
(iii) Money set
aside for retirement purposes;
(iv)
Other work-related personal expenses, such as transportation to and from work.
These expenses are accounted for by the twenty per cent earned income deduction
described in rule
5101:4-4-23 of the
Administrative Code; and
(v)
Depreciation.
(D) Are assistance groups with individuals
who are self-employed required to register for work?
The receipt of income from self-employment does not
automatically exempt a member from the work registration requirement. The
member must
is
to be actively engaged in the enterprise on a day-to-day basis, and the
county agency shall
is to determine that the self-employment enterprise
either:
(1) Requires at least thirty
hours of work per week during the period of certification or an average of
thirty hours per week on an annual basis; or
(2) When not generating thirty hours of work
a week, is receiving weekly gross earnings at least equal to the federal
minimum wage multiplied by thirty hours.
(E) What if a self-employed individual
contracts work out?
When the assistance group member hires or contracts another
person or firm to handle the daily activities of the self-employment, the
member will not be considered as self-employed for the purpose of work
registration unless the person continues to work at least thirty hours per week
or receives the equivalent of the federal minimum wage multiplied by thirty
hours from the self-employment business.
(F) Can seasonal work exempt an individual
from the work registration requirement?
When on an annual basis the seasonal employment either averages
thirty hours of work per week, or produces earnings averaging at least the
federal minimum wage multiplied by thirty hours per week, the assistance group
member engaged is exempt from registering even in non-work periods.
For example, when an individual works a minimum of one thousand
five hundred sixty hours during the season (thirty hours times fifty-two) or
earns the equivalent of this multiplied by the federal minimum wage, he or she
is exempt from work registration even during the off-seasons. When the annual
average does not meet the minimum for exemption, the member
must
is to
register for work unless another exemption is met.
Notes
Ohio Admin. Code
5101:4-6-11
Effective:
1/1/2025
Five Year Review (FYR) Dates:
11/1/2026
Promulgated Under:
111.15
Statutory
Authority: 5101.54
Rule
Amplifies: 329.04,
329.042,
5101.54
Prior
Effective Dates: 06/02/1980, 10/01/1981, 09/27/1982, 05/01/1986 (Emer.),
06/15/1986 (Emer.), 08/01/1986 (Emer.), 10/01/1986, 08/01/1987 (Emer.),
10/25/1987, 01/05/1990 (Emer.), 03/22/1990 (Emer.), 10/01/1990, 05/01/1996,
04/01/1997 (Emer.), 06/06/1997, 02/01/1999, 06/01/2001 (Emer.), 08/27/2001,
02/01/2004, 01/01/2009, 08/01/2010, 12/01/2011, 10/01/2016,
11/01/2021
