1540 Self-Employment | TANF
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Georgia Division of Family and Children Services |
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Policy Title: |
Self-Employment |
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Effective Date: |
January 2020 |
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Chapter: |
1500 |
Policy Number: |
1540 |
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Previous Policy Number(s): |
MT 1 |
Updated or Reviewed in MT: |
MT-52 |
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Requirements
Income earned directly from one’s own business or profession, rather than as specified salary or wages from an employer, is budgeted as self-employment income.
Basic Considerations
The amount of income budgeted is determined by using the total gross receipts plus capital gains, if any, less business expenses (the cost of doing business).
Appreciation is an increase in the value of a resource because of any of the following:
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improvements to the property
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normal market increases
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interest accrued.
Determine appreciation by obtaining verification of the value of the resource from a reliable source.
Depreciation occurs when a resource loses value because of any of the following:
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destruction of property in a storm, fire, or other reason
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long term use of resource reduces value, (e.g. vehicles).
Determine depreciation by obtaining verification from a reliable source.
Rental Property
Use this policy in Chart 1540.1 to determine how to treat income from rental property:
| IF | THEN |
|---|---|
an AU member is actively involved in property management for at least 20 hours per week |
count the gross income less cost of doing business as earned income. |
an AU member is not actively involved in property management for at least 20 hours per week |
count the gross income less cost of doing business as unearned income. |
Capital Gains
Consider the total proceeds from the sale of capital goods or equipment, less depreciation, as capital gains income.
Add capital gains income to the AU’s gross self-employment income.
Cost of Doing Business
Deduct from the gross self-employment income the expenditures listed in Chart 1540.2 related to the operation of a self-employment enterprise. Refer to Chart 1540.2 - Costs of Doing Business.
Boarder Income
Disregard as income the first $70 received per boarder per month. Count as income any amount received in excess of $70 per boarder per month. If the AU’s actual expenses exceed $70 per boarder per month, those expenses must be verified before they can be deducted from the AU’s countable income.
Use the policy in Chart 1540.2 to determine allowable cost of doing business expenses:
| ALLOWABLE EXPENSES (Not All-Inclusive) | UNALLOWABLE EXPENSES (All-Inclusive) |
|---|---|
labor costs stock, raw material, seeds, fertilizer interest on payments on loans for equipment, real estate, or other loans used in producing income insurance premiums on real estate or equipment property taxes on income-producing property job-related transportation costs |
payment on the principal of the purchase price of income - producing real estate, equipment, machinery, etc. local, state and federal income taxes income set aside for retirement personal expenses (transportation to and from work, living expenses) depreciation on equipment, real estate, etc. |
Treatment of Income
Convert self-employment income to an annual amount if either of the following occurs:
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the self-employment income represents a year’s support, even if the income is received in a short time period; or
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the self-employment income accurately reflects the AU’s current circumstances.
| Convert self-employment income to an annual amount even if the AU receives additional income from other sources. |
Do not convert self-employment income to an annual amount if any of the following occur:
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the self-employment income is not an accurate picture of the AU’s current circumstances because income has recently increased or decreased
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the self-employment income represents income for only a part of the year; or
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the self-employment income is from a new business in operation less than one year.
Use the policy in the following Chart 1540.3 to convert self-employment income to an annual amount:
| IF THE INCOME IS RECEIVED | THEN |
|---|---|
annually |
total gross receipts, less the cost of doing business, and divide by 12 to determine the monthly amount to budget. |
periodically but represents one year’s support |
total gross receipts of the annual income, less the cost of doing business, and divide by 12 to determine the monthly amount to budget. |
monthly, or more frequently |
total gross receipts, less the cost of doing business, and divide by 12 to determine monthly amount to budget. |
Use the policy in the following Chart 1540.4 to determine treatment of income which is not annualized:
| IF THE INCOME | THEN |
|---|---|
does not reflect current circumstances (recent increase or decrease in income) |
Determine the best estimate of current gross income, less the cost of doing business, to use as the monthly amount budgeted. |
Is from a new business, i.e., in operation less than one year |
Divide the gross income, less the cost of doing business, by the number of months in the period of operation to determine projected monthly income |
represents income for only part of the year |
Divide the gross income, less the cost of doing business, by the number of months the income is intended to cover. |
Is received monthly |
Count the total gross monthly income, less the cost of doing business. |
Procedures
Budgeting Procedures
Follow the steps below to determine income for inclusion in the budget:
| Step 1 |
Add all gross self-employment income. |
| Step 2 |
Add any capital gains, less depreciation. |
| Step 3 |
Subtract the cost of doing business. The result is the adjusted gross self-employment income. |
| Step 4 |
Calculate deductions and benefit level as for any other AU. Refer to Chapter 1600, Eligibility Budgeting. |