352.4 Computing Monthly Profit

The CAO must figure out an individual’s monthly profit for the months that the self-employment covers, as follows:   55 Pa. Code § 181.133      55 Pa. Code § 181.272

1. Add the gross earnings from self-employment.

2. Subtract the allowable costs of getting the income.

3. Divide the result by the number of months the income is meant to cover.

352.41 Allowable Costs for Self-Employment Income

The allowable costs for self-employment income are the expenses an individual will pay to run a business or to rent nonresident property.

The CAO must allow deductions for the proven costs of doing business. If the individual does not provide proof of a business expense, the CAO must figure out the profit without allowing a deduction for that expense.

 

NOTE:  When figuring out the profit for an individual who just recently became self-employed, the CAO must estimate the amount of federal, state and local taxes he or she will have to pay.

NOTE:  The self-employment tax is not an allowable deduction for MA. The self-employment income used in the MA eligibility decision is taken from IRS Form 1040, Schedule C, Line 31, Net profit or (loss). Schedule C does not allow the self-employment tax.

NOTE:  Schedule C does not allow a deduction for health insurance expenses for a self-employed individual. However, it is an allowable deduction for MA if it meets the conditions in Section 361.5 (MNO) or Section 360.6 (NMP).

 

The following are examples of allowable costs for all categories of MA:

 

The CAO will also allow deductions for the following expenses for TANF/GA-related categories of MNO:       55 Pa. Code § 181.272(1)

 

For MAGI-related MA, all self-employment deductions allowable by the Internal Revenue Service (IRS) can be deducted from an individual's gross self-employment.

352.42 Renting Real or Personal Property—SSI-Related

If a SSI-related individual reports income from rental property to the IRS, the CAO must figure out the amount of the profit by allowing deductions for the cost of getting the income. (See Section 352.41, Allowable Costs of Getting Self-Employment Income.)        55 Pa. Code § 181.107

 

Reminder: If the income is not reported to the IRS, the CAO must count the income as unearned income. (See Chapter 360.3 Unearned Income Deductions- SSI Related, and Chapter 361.3 Unearned Income Deductions- SSI Related   for allowable deductions from unearned rental income.)

352.43 Rent, Room, and Room-and-Board Income—TANF/GA-Related

If a TANF/GA-related individual gets self-employment income from renting out property that he or she doesn’t live in (non-resident property) and the rental is not managed by a third party, then the CAO must figure out the amount of profit by allowing the deductions for the cost of doing business. (See Section 352.41, Allowable Costs of Getting Self-Employment Income.)        55 Pa. Code § 181.272

 

If the TANF/GA-related individual gets self-employment income from room and/or board, room rent, or apartment rent in the resident property, the CAO must figure out the profit as follows:

1. Add the amount of rent being paid.

2. Subtract $10.

3. Subtract 50 % of the amount that is left.

1. Add the amount of room and board being paid.

2. Subtract 40 % of the amount.

3. Subtract the highest amount that can be used for SNAP for the household size, using the total number of people paying room and board.

1. Add the amount of board being paid.

2. Subtract the highest amount that can be used for SNAP for the household size, using the total number of boarders.

1. From the total rent payments, subtract $10, and then subtract 50% of the amount that is left.

2. From the total room and board payments, subtract 40%.

3. From the board payments and the amount of the room and board payments that are left after the above deductions, subtract the highest amount that can be used for SNAP for the household size, using the total number of boarders and roomer/boarders.

Example: Mrs. Kizer rents two rooms in her home. She has two roomer/boarders and two boarders. She gets $160 a month in room rent, $360 a month in room and board (R&B) payments, and $200 a month in board payments.

 

Total room rent

$160

Deduction

   -10

 

$150

50%

   -75

Profit from room rent

$75

 

 

Total R&B payments

$360

40%

 -144

 

$216

Board payments

+200

 

$416

Minus SNAP amount for 4 people

 -352

Profit from R&B and boarders

$64

 

 

Total profit

$139

 

Updated September 4, 2018, Replacing February 14, 2012