(A) How is self-employment income determined?
(1) Averaging self-employment income
(a) Self-employment income must 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 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 be averaged over the period of
time the business has been in operation and the monthly amount projected for
the coming year.
(2)
Anticipating
Calculating monthly self-employment
income
For the period of time over which self-employment income is
determined the county agency shall:
(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 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 selfemployment 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
some
of the 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 be calculated in the
same manner as a capital gain for federal income tax purposes. Even
if
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 count the full
amount of the capital gain as income for
food
assistance
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 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
as
provided in paragraph (B) of rule
in accordance
with rules 5101:4-4-07
and 5101:4-4-13 of
the Administrative Code
and paragraph (I) of rule
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 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
exclusions
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
excluded
included as costs of doing business.
(xi)
Exclusions
from income received from
The cost of doing
business for boarders
who are not included in the
assistance group shall be considered in accordance with rule
5101:4-6-03 of the
Administrative Code.
(xii) Exempt income of children in
migrant assistance groups shall be handled in accordance with paragraph (G) of
rule 5101:4-4-13 of the Administrative Code.
(xiii)(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
exclusions
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 be actively engaged in the enterprise on a day-to-day basis, and
the county agency shall 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 selfemployed 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?
if
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 register for
work unless another exemption is met.
Notes
Ohio Admin. Code 5101:4-6-11
Effective:
11/1/2021
Five Year Review (FYR) Dates:
8/6/2021 and
11/01/2026
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
