WAG 13-02-03-a: Budgeting Self-employment Income

PM 13-02-03-a

Budgeting Self-employment Income

Use the federal income tax return from the previous year to figure annual self-employment income.

Use actual verified income and business expenses from the budget month when self-employment income is received monthly.

Note: Allow the customer the option of choosing when an expense is claimed. The expense may not be claimed more than once.

Example: Mr. G is a self-employed painter. He had no earnings in February but purchased a $75 supply of paint brushes. In March, he earned $500 and did not have any expenses for the month. Mr. G chooses to the claim the expense of $75 in March. 

Verification of Income and Expenses

Self-employment income and expenses may be verified by using the customer's own self-employment records such as, but not limited to business ledgers, invoices, receipts, tax returns or the customer's statement if records are not kept.

Customer Has Own Records

• When a customer reports on one of the applications listed below and/or during the interview that they have current self-employment records (their own records), the worker should issue a Verification Checklist (IL444-0267) requesting the applicable verification be returned within 10 calendar days.
  • IL444-2378B, Request for Cash Assistance - Medical Assistance - Supplemental Nutrition Assistance Program (SNAP); or
  • IL444-683, Application for the Supplemental Nutrition Assistance Program (SNAP); or
  • IL444-1893, Medical, Cash and SNAP Redetermination Application; or
  • Application for Benefits Eligibility (ABE).
    • Note: Self-employment expenses may also be reported on the attachment to the application, Expedited SNAP Screening Form (IL444-0401). Only identity must be verified for expedited service. Document in Case Comments if Form IL444-0401 with the application was used as part of the verification source.

• If the information provided by the customer is questionable, request additional documentation.
• Upload all documents used to determine eligibility to the ECR.

Example: Mr. P sends his monthly self-employment record with his Medical, Cash and SNAP Redetermination Application (IL444-1893). Mr. P has recorded a monthly car insurance payment of $700 in addition to his regular insurance payment and other business expenses. During the interview, the worker asks Mr. P about the $700 monthly payment. Mr. P explains that he is an Uber driver and must carry additional insurance to cover his passengers. He drives his vehicle an average of 2,000 miles during the month. Based on his self-employment records and his statement the vehicle was used to drive 1,600 miles for the Uber business and 400 miles for personal use. The worker issues a Verification Checklist (IL444-0267) to request that Mr. P provide verification of the additional insurance premium and other business expenses within 10 calendar days. Mr. P verifies his insurance coverage and other expenses for fuel costs, monthly cleaning and maintenance of the vehicle, and cell phone charges. Mr. P is allowed the full $700 insurance expense and only 80% (1,600 ÷ 2,000) of the other cost of operating the vehicle for business purposes. The other 20% is considered personal use. The allowable business expenses are subtracted from Mr. P's gross monthly income before comparing the income to the Maximum Monthly Gross Income Standard for a household size of 1. The net income result after the business expenses have been allowed is used in the SNAP Net Benefit Calculation.

Customer Does Not Keep Records

• If it becomes known at the time of the interview or at the initial report of self-employment, that the customer does not keep records:
  • The income and expenses reported on the application form (IL444-2378B, IL444-0683, IL444-1893 or ABE) may be considered as the best available verification source so long as it is clear, not questionable, and matches what the customer is reporting during the interview; or
  • If the self-employment income and expenses reported on the application are different from what the customer is reporting during interview, the income reported during the interview can be used as verification if it is confirmed by the customer, including during the recording of the telephonic signature. The customer may complete Form IL444-2790 or the worker may complete the form if it is not an in-person interview, to show the newly reported amounts. Upload the completed form to the Electronic Case Record (ECR).
• Explain to the customer that they must keep self-employment records to submit in the future with their redeterminations (REDE) and Mid-Point Reports, if applicable. Inform the customer that they may submit their own records or use the optional, Self-Employment Record (IL444-2790). Issue a supply of Form IL444-2790 to the customer if that is their choice for maintaining records. Customers may also access Form IL444-2790 on the IDHS website.
• Use "Other acceptable" as the verification source in the Integrated Eligibility System (IES) to indicate that no other verification is available. This will prevent the case from pending for Form IL444-0267.

Example: JB submits Request for Cash Assistance - Medical Assistance - Supplemental Nutrition Assistance Program (IL444-2378B) for SNAP benefits on 07/26/2024. JB indicates he is self-employed on the application and no other income is reported. At the telephone interview on 08/5/2024, JB states he does not have a steady job. He does occasional blood plasma donations and odd jobs such as mowing lawns and collecting cans for recycling. JB states he is paid in cash and does not ask for receipts or keep any records of the work he has done. Since JB does not have records to provide, the worker chose to enter the amounts reported during the interview on Form IL444-2790 based on his statement of the work he performed in the last 30 days. Documentation in Case Comments is still required even if the worker chooses not to complete the optional Form IL444-2790. The worker explains to JB that he must keep his own records, or he can use the optional Form IL444-2790 to keep records for his next reporting period. JB chooses to maintain his own records. The worker uploads the completed Form IL4444-2790 to the ECR and documents the details of the discussion in Case Comments.

Next Reporting Period

If at the next reporting period, a customer has not kept records, accept their statement and reiterate the importance of keeping records for an accurate determination of eligibility and benefit amount. If their statement and/or the information provided appears to be questionable, issue Form IL444-267 to request proof for what can reasonably be expected to be provided based on the type of work performed and the likelihood of the customer being able to return to the source for the verification. A customer who occasionally does odd jobs for cash and not routinely with the same persons may not be able to return to them to get verification. Also, some individuals may be unwilling to provide a customer with a written statement.

Example: At initial application, JB decided to keep his own self-employment records instead of using Form IL444-2790. At redetermination, JB submits the application Form IL444-1893. He does not provide any self-employment records. At the interview, the worker discusses with JB, his previous report of doing odd jobs. JB states in the last 30 days he donated blood and recycled cans. He also did some property cleanup work for some people who had experienced storm damage in a nearby neighborhood and was paid cash. He states he learned of storm damage in his community from the news and went to the neighborhood offering to help people he saw cleaning up their yards after the storm. JB states this is not a neighborhood he would normally be in and does not know any of the people he helped. The worker does not find this information questionable and accepts JB's statement. While it may be possible for JB to return to the places where he was paid cash for the blood donation and recycled cans, it may not be reasonable to expect him to return to the neighborhood for written statements from individuals he met with randomly. The worker documents the details of the discussion with JB in Case Comments.

Case Comments

• Case Comments are important to prevent potential Quality Control (QC) errors during case reviews. Detailed Case Comments must include how self-employment income and expenses were verified and should include if the:
  • Customer's own self employment records were used and uploaded in the ECR; or
  • Self-employment income and expenses reported on the application (IL444-2378B, IL444-0683, IL444-1893 or ABE) were used as the verification source because the customer did not keep records and it was confirmed by the customer, including during the recording of the telephonic signature. The worker should select "Other acceptable" as the verification source in IES. In this instance, the case should not pend for Form IL444-0267 because the information on the application was used as the best available verification source that the customer could provide due to no other records being available; or
  • Self-employment income and expenses reported on the application (IL444-2378B, IL444-0683, IL444-1893, or ABE) are different from the self-employment income reported by the customer during interview. The customer's reported income and expenses during the interview were used as verification. It was confirmed by customer, including during the recording of the telephonic signature. Form IL444-2790 was completed by a worker to show the new reported amounts by the customer or because it was not an in-person interview. Form IL444-2790 was uploaded to the ECR.
    • Note: Self-employment expenses may also be reported on the attachment to the application, Expedited SNAP Screening Form (IL444-0401). Only identity must be verified for expedited service. Document in Case Comments if Form IL444-0401 with the application was used as part of the verification source.

Pay Frequency

• When the only source of self-employment income is received weekly or every other week, convert to a monthly amount to budget see PM 13-02-04. Convert an expense to a monthly amount when the expense is paid weekly or every other week, PM 13-02-04.
  • Example 1: Ms. J is self-employed in her home providing child care services. She reports receiving income of $200 each Friday and expenses of $25 per week. The total self-employment earnings budgeted is $860 ($200 x 4.3 = $860. See PM 13-02-04). Allow $107 as a deduction for expenses ($25 x 4.3 = $107).
  • Example 2: Mr. T has a lawn service business. He earns $155 per week mowing lawns. His self-employment records show a business expense of $15 per week for gas for his lawn mower and $25 for gas to travel in his vehicle to each work site. The total self-employment amount budgeted is $494 ($155 x 4.3 = $666 see PM 13-02-04) minus deductions ($40 x 4.3 = $172). 
• If income is received from more than one source and the frequency of pay is different from each source, add the actual income from all sources. Enter the income from all sources as one gross monthly amount.
  • Example: Mr. B delivers newspapers and receives income from three different sources. Mr. B is paid weekly from X. On 08/04, he received $50, 08/11 $50, 08/18 $50, and 08/25 $50. Y pays Mr. B every other week. He received $100 on 08/01, $100 08/15, and $100 08/29. Mr. B receives pay monthly from Z and on 08/29 he was paid $200. His expenses are $50 per month. The total self-employment amount budgeted is $650 ($700 - $50 = $650). Set a control to remove the extra periodic check. 
• When a person is self-employed and the payment frequency of the expenses varies, use actual expenses as a deduction.
  • Example: The SNAP household consist of 7 people. Mr. R records his earnings as a cab driver at the end of each week as follows: 08/02 $400, 08/09 $450, 08/16 $525, 08/23 $575, and 08/30 $675. Mr. R has a monthly insurance payment of $610. He pays a taxi lease and licensing fee on 08/07 $100 and 08/14 $100. He reports his weekly fuel cost as 08/02 $85, 08/07 $105, 08/14 $115, 08/21 $90, and 08/28 $125. The total self-employment earnings budgeted is $927 ($2,625 ÷ 5 x 4.3 see PM 13-02-04) minus actual expenses of $1,330.