152.4 Computing Monthly Profit from Self-Employment Income

To determine monthly profit for the period covered:     

55 Pa. Code § 183.65

• Total the gross receipts expected from self-employment.

• Deduct any allowable costs of producing self-employment income.

• Divide the result by the number of months the income is expected to cover.

The result is considered monthly profit.

152.41 Allowable Costs of Producing Self-Employment Income

Allowable costs of producing self-employment income are the day-to-day expenses of operating a business, but not the costs of establishing or improving a business. They can be determined from tax forms or business records.     

55 Pa. Code § 183.65

When computing profit, the CAO will allow deductions for the verified costs of doing business. If the budget group does not provide verification of the business expense, the CAO will compute profit without allowing a deduction for the unverified expense.

The following are examples of allowable costs:

• Costs of maintaining a place of business such as rent, utilities, insurance on the business and its property, and property taxes.

NOTE:  If a business is operated in a home, the costs of maintaining a place of business are only those costs identified for the part of the home used exclusively for the business.

• Interest on the purchase of income-producing equipment and property.

• Employee labor costs.

• Cost of goods sold, supplies, and materials.

• Advertising costs.

• Accounting and legal fees.

• Professional licensing fees and union dues, if necessary to practice a profession or trade; and

• Transportation costs necessary to produce income.

The following are examples of costs that are not allowable:

• Depreciation.

• Personal business and entertainment expenses.

• Personal transportation.

• Purchase or improvement of capital assets.

• Payments on the principal of loans for income-producing property or equipment.

• Work-related expenses, such as federal, state, and local income taxes, contributions to retirement funds, and transportation to and from work. The work expense deduction covers these expenses. See Chapter 160, Income Deductions; and

• Deposits into the self-employed person’s retirement account and payment for his or her life insurance.

152.42 Income from Roomer and Boarder Payments

Income from a roomer or boarder includes all direct payments to the budget group for room rent, meals, and utilities. Shelter expenses paid by a roomer or boarder directly to a third party are not considered income to the budget group.    

55 Pa. Code § 183.65

If the budget group is renting out a room or an apartment, the CAO will:

• Total the amount of rent being paid by all the roomers.

• Subtract $10.

• Subtract 50% of the remainder.

The resulting amount is considered profit from room or apartment rent.

Examples:

Mrs. Abbey rents a room in her home and receives $60 a month room rent.

Mr. and Mrs. Hicks rent rooms to Amy Smith, Kristi Sperry, and Marlene Finley. Each room rents for $70 a month.

If the budget group is providing only board to persons, the CAO will:

• Total the amount of board being paid.

• Subtract the maximum SNAP benefit for the household size based on the total number of boarders.

The remaining money is considered profit from the boarder payments.

If the budget group is providing room and board, the CAO will:

• Total the amount of room and board being paid.

• Subtract 40% of the gross receipts.

• Subtract the maximum SNAP benefit for the household size based upon the total number of boarders.

The remaining money is considered profit from the room and boarder payments.

Example: Mrs. Bates has an adult son living in her home who pays her $30 per week for room and board.

For renters, boarders, and room and boarders, deduct the following and add the results:

• From total room and apartment rent, subtract $10 plus 50% of the remainder.

• From the room and board payments, subtract 40% of the total gross payments.

• From the board payments and the balance remaining of the room and board payments after the above deductions, subtract the maximum SNAP benefit for the household size based on the total number of boarders and room and boarders.

Example: Mrs. Dent rents two rooms and has two roomers and boarders and two boarders in her home. She receives $120 a month from room rent, $250 a month room and boarder payments, and $160 a month boarder payments.

The total amount remaining is considered profit and is counted as gross earned income.

Reissued September 21, 2012, replacing January 31, 2012; reviewed March 1, 2018