312.63 Offsetting Self-Employment Losses
MAGI-related MA rules follow the Internal Revenue Service (IRS) rules regarding self-employment losses, and offsetting of other income reported on the tax return. A tax filer can claim a net loss from self-employment to offset other income reported on the IRS form 1040, with the exception of countable Retirement, Survivors, and Disability Insurance (RSDI) benefits, non-taxable interest, and foreign earned income. This is not applicable to Cash, SNAP, and non-MAGI MA determinations.
Example 1: An individual has two Schedule C businesses, and reports a loss of $12,500 on Business A, and net profits of $24,500 on Business B in the same year on IRS form 1040. The loss from Business A offsets the net profits from Business B to $12,000 in this MAGI-related MA eligibility determination.
Example 2: An individual reports $40,000 in annual wages from Company A and negative self-employment income of $25,000 annually in the same year on the IRS form 1040. The net loss from self-employment is used to offset the wages from Company A to $15,000 in the MAGI-related MA eligibility determination.
Example 3: An individual files a joint return with their spouse, and reports their negative self-employment income of $10,000 annually, and their spouse’s wages $30,000 annually in the same year on the IRS form 1040. The net loss from self-employment is used to offset the spouse’s wages to $20,000 in the MAGI-related MA eligibility determination.
Updated March 20, 2018 , Replacing July 21, 2017