SOCIAL AND HEALTH SERVICES
(Economic Services Administration)
Date of Adoption: September 7, 2001.
Purpose: These rules explain what self-employment is, how the department treats self-employment income, and what business expense can be used as a deduction.
Citation of Existing Rules Affected by this Order: Repealing WAC 388-450-0090; and amending WAC 388-450-0080 and 388-450-0085.
Statutory Authority for Adoption: RCW 74.08.090 and 74.04.510.
Adopted under notice filed as WSR 01-16-140 on July 31, 2001.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 1, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 2, Repealed 1.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 2, Repealed 1.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: Failure to
adopt these rules timely will cause some applicants and
recipients to be wrongly denied or terminated from cash and food
Effective Date of Rule: October 1, 2001.
September 7, 2001
Brian H. Lindgren, Manager
Rules and Policies Assistance Unit2964.1
(1) Self-employment ((
earned)) income is (( used to reduce a
client's need for assistance. The income is treated as earned
income as provided in WAC 388-450-0030.
(2) Self-employment earned income is defined as gross business income minus total allowable business expenses as defined in WAC 388-450-0085.
(3) In order to establish eligibility for assistance, a self-employed client must maintain and make available to the department a record clearly documenting all business expenses and income.
(4) Income from the following is treated as self-employment income:
(a) Adult family home;
(c) Roomers and boarders;
(d) Rental and lease of personal property or real estate owned by the client is counted as unearned income unless the following conditions are met:
(i) For TANF/SFA clients, the use of the property is part of an approved individual responsibility plan;
(ii) For food assistance clients, the client spends at least twenty hours per week managing the property; or
(iii) For RCA or GA clients, there are no specific requirements of a self-sufficiency plan or a set number of hours managing the property.
(e) Self-produced or supplied items.
(5) For food assistance, when two or more assistance units share a residence, the money paid from one assistance unit to the other assistance unit for shelter costs is roomer income when:
(a) One assistance unit owns or is buying the residence; or
(b) One assistance unit is renting a residence and charges the other assistance unit an amount that is in excess of the total cost of renting the residence)) income you earn from a business you own or operate rather than income from an employer. It does not have to be a licensed business to qualify as self-employment. Some examples of self-employment include:
(b) Operating an adult family home;
(d) Driving a taxi cab;
(e) Selling self-produced or supplied items;
(f) Working as a subcontractor; and
(g) Operating a lodging for roomers and/or boarders. Roomer income includes money paid to you for shelter costs by someone who lives with you if you:
(i) Own your residence; or
(ii) Rent your residence and charge the other people more than the total rent.
(2) Most self-employment income is considered earned income as described in WAC 388-450-0030.
(3) For TANF/SFA and food assistance there are special rules about renting or leasing out property or real estate that you own.
(a) We count the income you get as unearned income unless you spend at least twenty hours per week managing the property.
(b) For TANF/SFA, we count the income as unearned income unless the use of the property is a part of your approved individual responsibility plan.
[Statutory Authority: RCW 74.08.090 and 74.04.510. 99-16-024, 388-450-0080, filed 7/26/99, effective 9/1/99. Statutory Authority: RCW 74.04.050, 74.04.055, 74.04.057 and 74.08.090. 98-16-044, 388-450-0080, filed 7/31/98, effective 9/1/98.]
(1) Rent or lease of business equipment or property;
(5) Office supplies;
(7) Business related insurance, taxes, licenses and permits;
(8) Legal, accounting, and other professional fees;
(9) For TANF/SFA, RCA, and GA assistance programs only, the cost of goods sold, including wages paid to employees producing salable goods, raw materials, stock, and replacement or reasonable accumulation of inventory, provided inventory has been declared exempt on the basis of the individual responsibility plan or other plan approved by the department;
(10) Repairs to business equipment and property, excluding vehicles;
(11) Interest on business loans used to purchase income-producing property or equipment;
(12) Gross wages and salaries paid to employees who are not:
(a) Producing salable goods; or
(b) A member of the assistance unit
(13) Commissions paid to agents and independent contractors;
(14) Seed, fertilizer, and feed grain for a self-employed farmer;
(15) Other reasonable and necessary costs of doing business;
(16) The cost of the place of business:
(a) For TANF/SFA, RCA, GA, and medical assistance, if any portion of the client's home is used as the place of business, it must be used exclusively for business to be an allowable business expense. The percentage of the home used for business can be an allowable business expense;
(b) For food assistance, there is no requirement for a portion of the home to be used exclusively for business. The percentage of the home used for business can be an allowable business expense
(17) The following transportation expenses are allowed as a deduction from gross self-employment income:
(a) Actual, documented costs for:
(i) Gas, oil, and fluids;
(ii) Replacing worn items such as tires;
(iii) Registration and licensing fees;
(iv) Auto loan interest; and
(v) Business related parking and tolls; or
(b) A cost per mile established by the department)) for children, pregnant women and families.
(1) We decide how much of your self-employment income to count by:
(a) Adding together your gross self-employment income and your capital gains (all of the income you receive from the sale of your business property or equipment);
(b) Subtracting your business expenses as described in subsection (2) below; and
(c) Dividing the remaining amount of self-employment income by the number of months over which the income will be averaged.
(2) We automatically subtract one hundred dollars as a business expense. If you want to claim more than one hundred dollars, you must itemize and provide proof of your expenses in order for us to count them. We never allow the following expenses:
(a) Federal, state, and local income taxes;
(b) Money set aside for retirement purposes;
(c) Personal work-related expenses (such as travel to and from work);
(d) Net losses from previous periods;
(e) Depreciation; or
(f) Any amount that exceeds the payment you get from a boarder for lodging and meals.
(3) If you have worked at your business for less than a year, we figure your gross self-employment income by averaging:
(a) The income over the period of time the business has been in operation; and
(b) The monthly amount estimated for the coming year.
[Statutory Authority: RCW 74.08.090 and 74.04.510. 99-16-024, 388-450-0085, filed 7/26/99, effective 9/1/99. Statutory Authority: RCW 74.04.050, 74.04.055, 74.04.057 and 74.08.090. 98-16-044, 388-450-0085, filed 7/31/98, effective 9/1/98.]
The following section of the Washington Administrative Code is repealed:
|WAC 388-450-0090||Self-employment expenses that are not allowed as income deductions.|