26.7 DETERMINING MONTHLY INCOME WHEN AVERAGED

1240-1-4-.24(4)

For the period of time over which self-employment is determined, add all gross self-employment income (including capital gains), exclude the costs of producing the self-employment income, and divide the self-employment income by the number of months over which the income will be averaged.

If a self-employment farm enterprise has received at least $1,000 in gross annual proceeds and its costs of producing the self-employment income exceed the gross proceeds, deduct these excess costs from the household’s other gross monthly income. Determine the monthly amount of excess costs to be excluded as follows:

1. Subtract the costs of producing the farm income from the gross farm proceeds;

2. Divide the excess costs (loss) by the number of months over which the income would have been averaged. The result is the monthly amount of excess costs to be excluded from the household’s other income.

3. If the household has self-employment income from farming and another type of self-employment enterprise, compute these incomes separately, since the excess costs of producing non-farm self-employment income cannot be excluded from other household income.

Example: Mr. Green is a self-employed farmer, who applied for Food Stamps for his four-person household in July, 1997. Mr. Green made $2,000 from his farming enterprise during the last year. His costs of producing that income were $2,720 for that same time period. Mr. Green’s son, James, works part-time at a restaurant and earns $320 per month. Determine the gross monthly income as follows:

Mr. Green’s Gross Self-Employment Farm Income:		2,000.00
Costs of Producing Farm Income:	-	2,720.00
Excess Costs (Loss)	-	720.00

Annualize the excess costs: $720 divided by 12 = $60 monthly loss

James’ Earnings		320.00
Monthly Loss	-	60.00
Gross Monthly Income		260.00

When computing Mr. Green’s food stamp budget apply the earned income deduction to James’ total gross earnings prior to excluding the excess costs.

James’ Earnings: $320 x 20% = $64 Earned income deduction

In this situation, the budget will show $260.00 gross earnings with a $64.00 earned income deduction.

Example: Mr. Brown is a self-employed farmer. His gross proceeds for the preceding year were $5,000.00, but his costs of producing this income were $6,200.00. Mr. Brown’s mother, Annie Brown, who is a household member, receives $305.00 monthly SSA. Compute Mr. Brown’s monthly excess costs as follows:

Self-Employment Farm Income		5,000.00
Costs of Producing Income:	-	6,200.00
Excess Costs (Loss)	-	1,200.00

Annualize the excess costs: $1,200.00 divided by 12 = $100 .00 monthly loss

Annie Brown’s SSA		305.00
Monthly Loss	-	100.00
Gross Unearned Income to be used in budget		205.00

There will be $0 Gross Earnings and $0 Earned Income Deduction

Glossary of Terms

Food Stamp Table of Contents