16 Del. Admin. Code § 9000-9074

Current through Register Vol. 28, No. 7, January 1, 2025

Section 9000-9074 - Self-Employment Income

DSS must calculate a household's self-employment income according to DSSM 9074.1 and 9074.2.

9074.1 Calculate a Household's Self-employment Income as Follows

(1) Averaging self-employment income.

(i) Average the income over the period the income is intended to cover, even if the household receives income from other sources. If the averaged amount does not accurately reflect the household's current circumstances, calculate the self-employment income on the basis of anticipated earnings, not prior earnings

(ii) For self-employment that has been in existence for less than a year, average the income over the period of time the business has been in operation. Project that monthly amount for the coming year.

(2) Determining monthly income from self-employment

(i) For the period of time over which the self-employment income is determined, add all gross self-employment income (actual or anticipated) and capital gains, exclude the costs of producing the self-employment income, and divide the remaining amount of self-employment income by the number of months over which the income will be averaged. This amount is the monthly net self-employment income. Add the monthly self-employment income to any other earned income received by the household to determine the total monthly earned income.

(ii) If the cost of producing self-employment income exceeds the income derived from self-employment as a farmer, such losses must be prorated according to (a)(1) of this section, and then offset against countable income to the household as follows:

(A) Offset farm self-employment losses first against other self-employment 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.

(3) Capital Gains

Calculate the proceeds from the sale of capital goods or equipment in the same manner as a capital gain for Federal income tax purposes.

If the self-employment income is calculated on an anticipated basis, count the amount of capital gains the household anticipates receiving during the months over which the income is being averaged.

9074.2 Self-Employment Standard Deduction for Producing Income

The cost for producing income is a standard deduction of the gross income. This standard deduction is a percentage of the gross income determined annually and is listed in the Cost-of-Living Adjustment (COLA) notice each October.

The standard deduction is considered the cost to produce income. The gross income test is applied after the standard deduction. The 20% earned income deduction is then applied to the net self-employment income and any other earned income in the household.

The standard deduction applies to all self-employed households with costs to produce income. To receive the standard deduction, self-employed households must provide and verify they have business costs to produce income. The verifications can include, but are not limited to, tax records, ledgers, business records, receipts, check receipts, and business statements. The self-employed household does not have to verify all its business costs to receive the standard deduction.

Self-employed households not claiming or verifying any costs to produce income will not receive the standard deduction.

The self-employment standard deduction will be reviewed annually to determine if an adjustment in the percentage amount is needed.

9 DE Reg. 564 (10/01/05)

9074.3 Food Stamp Self-Employment Charts

Types of Self-Employment Business Sale of Goods Storefront business Examples: Gift/craft shop, restaurant, gas station, florist	Potential Deductions Cost of maintaining storefront - i.e., rent, insurance, utilities, property taxes. Payments on purchase of income producing equipment/property. Employees' labor costs. Cost of supplies and goods sold. Advertising costs. accounting/legal fees. Licensing fees. professional/union dues. mileage/transportation necessary to produce/ continue income.	Verifications Gross non-exempt income shall be verified.	Special Considerations When business is transacted in cash, a paper trace (written verification) should be secured and presented by self-employed client. Verification that is not in writing must be fully documented. Income and costs of doing business, that have been mingled with regular household funds, must be verified to be separate and related to business.	Computation Considerations Gross Receipts' Cost of doing business. If income represents annual income, annualize over 12 month period. If income received monthly and is annual support, annualize over 12 months if accurate reflection of earnings - otherwise use anticipated earnings. If business less than 1 year old, average income for months and project over certification period.
In-Home Business. Examples: tupperware sales, Avon sales, manufacturer's rep., farmer, craft, sales	Prorated share of utilities, taxes, insurance and maintenance if space used exclusively for business, Payments on purchase of income producing equipment/property. Employees' labor costs. Cost of supplies and goods sold. Advertising costs. Accounting/legal fees. Licensing fees. Professional/union dues. Mileage/transportation necessary to produce/ continue income.	When obtaining amount of non-exempt self-employment income, all business costs must be verified in order to be allowable deductions. Verified by: gross receipts, invoices, daily/monthly ledgers, canceled checks, bank statements, tax receipts, Schedule C of tax return, Schedule K or 1065 (for partnership).	Depreciation on property and equipment is not an allowable deduction.
Sale of Services Store-front business. Examples: Beauty shop, cleaning company, real estate/insurance.	(Same as deductions for store-front business for sale of goods).	Cost of doing business must be verified as separate from household costs.
In-Home Business. Examples: Truckers, odd jobbers, seamstress, musicians, beauticians, daycare.	(Same as deductions for store-front business for sale of goods).		For partnerships, see partnership agreement or contract to determine proportionate share.	For partnerships: Gross receipts/cost of doing business divided by proportionated share partnership liability.
Types of Self-Employment Room and Board 1. Roomer	Potential Deductions Same as in-home business	Verifications Signed statement of each roomer. Cost of doing business must be verified.	Special Considerations Cannot be siblings or parents/children living together unless elderly or disabled.	Computation Considerations
Boarder (3 or more meals per day.) B. (2 or less meals per day.)	If payment is equal to or greater than the appropriate maximum food stamp allotment for the boarder group. subtract maximum food stamp for boarder group allotment or actual documented cost of providing meals, if actual costs exceed food stamp allotment. If payment is equal to or greater than the appropriate 2/3 food stamp allotment for boarder group: subtract 2/3 maximum food stamp allotment or actual documented cost of providing meals, if actual costs exceed 2/3 of food stamp allotment.	Signed statement of each boarder stipulating amount paid and number of meals provided per day. Gross non-exemption income shall be verified. When obtaining amount of non-exempt self-employment income, all business costs must be verified in order to be allowable deductions. Verified by: Gross receipts, invoices, canceled checks, daily/monthly/ledgers, bank statements tax receipts, Schedule C of tax return, Schedule K or 1065 (if partnership). Cost of doing business must be verified as separate from household costs.	Cannot be siblings or parents/children living together. If payment is less than the appropriate maximum food stamp allotment for the board group - payment is not income. Boarder is not a boarder. He is considered a member of FS household and his whole income must be considered. If payment is less than 2/3 of the appropriate food stamp allotment for the boarder group, payment is not considered to be income; boarder is considered to be member of FS household and his whole income must be considered.
Commercial Boarding Home A commercial establishment which offers meals and lodging for compensation with intent of making a profit.	Identified costs necessary to produce and continue income.			Notes 1, 2, & 3 under "computation considerations" for businesses also could apply to commercial boarding home.
Rental Property Resident Management owners reside in portion of rental property.	Prorated share of taxes, utility bills, maintenance, insurance costs. (Proration is based on total square foot of rented area).	Utility bills, receipts which verify separate identifiable costs.	Member of household must average 20 hours per week actively engaged in management of rental property. Otherwise consider as unearned income.	If unearned income - not eligible for earned income deduction.
Non-resident Management - Owner resides separate and apart from rental property.	All expenses other than depreciation and mileage.	Tax receipts, bank statement of mortgage interest, utility bills, receipts/canceled checks.

9074.3.1 Food Stamp Self-employment Manual Guide

SELF-EMPLOYMENT INCOME Income derived from the provision of services or selling of goods when a person is not an employee of another. Common element - Tax and Social Security payments are the responsibility of the individual.
GUIDELINES The following guidelines should be used during the process of documenting and verifying gross receipts, determining allowable expense deductions, and determining the type of bookkeeping used by the client.
Questions to Ask: Are business and personal funds co-mingled? Are daily/monthly ledgers maintained documenting income and disbursements? What tax returns have or will be filed? What tax year is being used? For partnerships: Is there a Contract Structure? If business named other than owners, is business incorporated? Is there a Federal or State number? Is a separate checking account maintained for business?	What to look for: Business and income costs must be identifiable as separate from personal expenses to be allowed as deductions. If canceled checks are available, they should be examined with accompanying receipt and or invoices showing identifiable itemized costs. For income verification, check bank statements and sequentially numbered receipt/invoice records. Same as above. Obtain specific tax schedules, i.e., Schedule C, K or 1065 showing business deductions. Quarterly returns. NOTE: The 1040 line entry re: business loss/profit cannot be used as it incorporates deductible business expenses not permitted by FS regulations. Obtain copy of agreement which delineates proportionate shares of partners. Document parties involved. Obtain Corporation documents. Confirmation of parties involved who have access to tax funds. Canceled checks with accompanying receipts and/or invoices showing identifiable itemized costs.
SUMMARY OF COSTS NOT PERMITTED AS DEDUCTIONS: Personal mileage to and from place of business. State, Federal or Social Security Taxes. Depreciation. Deposits into Retirement Accounts, Personal Life & Health Insurance.

16 Del. Admin. Code § 9000-9074