Okla. Admin. Code § 340:50-7-30

Current through Vol. 42, No. 7, December 16, 2024

Section 340:50-7-30 - Self-employed households

(a)Person considered self-employed. A person is considered self-employed when:

(1) he or she claims self-employed status;

(2) he or she works as a sole proprietor or an independent contractor;

(3) he or she is in business for oneself, including a part-time business or gig work;

(4) he or she earns self-employment income from a partnership according to United States Internal Revenue tax forms;

(5) there is an employer/employee relationship and the employer does not withhold income taxes or Federal Insurance Contributions Act (FICA), even when required by law to do so; or

(6) the employer withholds taxes and the person provides proof he or she files taxes as self-employed.

(b)Self-employment income. Self-employment income received by household members whose income is derived from a self-employment enterprise owned solely or in part by the household member or when the household member works for an employer, but is considered self-employed per (a) of this Section, is treated per (1) through (10) of this subsection.

(1)Capital gains. The worker counts as income the proceeds from the sale of capital goods or equipment and calculates it in the same manner as a capital gain for federal income tax purposes. Even though a percentage of the proceeds from the sale of capital goods or equipment are taxed for federal income tax purposes, the worker counts the full amount of capital gain as income.

(2)Profit sharing. Households who operate S corporations, general or limited partnerships, or limited liability companies (LLC) may receive profit sharing that is reported on the household's personal income tax return.

(A) S corporation profit sharing is considered unearned profit-sharing income. Refer to Oklahoma Administrative Code (OAC) 340: 50-7-29(b)(2) and (c)(7) for information regarding S corporations.

(B) Partnerships are unincorporated businesses with two or more partners. Each partner may receive a profit share from the business. When the partner's Schedule K-1 (Form 1065), Partner's Share of Income, includes selfemployment income, the worker considers the partner's profit share as self-employment income.

(3)Self-employed farm income. To be considered a self-employed farmer, the farmer must receive or anticipate receiving annual gross proceeds of $1,000 or more from the farming enterprise.

(A) Farming is defined as cultivating or operating a farm for profit either as owner or tenant.

(B) A farm includes stock, dairy, poultry, fish, fruit, truck farms, or plantations, ranches, ranges, or orchards.

(i) A fish farm is an area where fish are grown or raised, artificially fed, protected, and cared for, and does not include an area where they are only caught or harvested.

(ii) A plant nursery is a farm for purposes of this definition.

(C) Per Section 273.11(a)(2)(ii) of Title 7 of the Code of Federal Regulations (7 C.F.R. § 273.11(a)(2)(ii)), when the cost of producing self-employment farm income exceeds the income received, the worker offsets the losses against other countable household income by:

(i) first offsetting the losses against other self-employment income; and

(ii) then offsetting any remaining farm self-employment losses against the total amount of earned and unearned income received by the household after applying the earned income deduction, per OAC 340:50-7-31(a)(2).

(D) When the household's self-employment farm income exceeds the cost of producing the farm income and there are no losses to offset, the worker calculates the self-employment farm income as regular self-employment income per (b)(7) of this Section.

(4)Monthly self-employment income. Self-employment income received on a monthly basis that represents a household's annual support, is normally averaged over a 12-month period. When the averaged amount does not accurately reflect the household's actual monthly circumstances because the household experienced a substantial increase or decrease in business, the worker calculates the self-employment income based on anticipated earnings.

(5)Seasonal self-employment income. Self-employment income intended to meet the household's needs for only part of the year is averaged over the period of time it is intended to cover. For example, the income of selfemployed vendors who work only in the summer and supplement their income from other sources during the balance of the year is averaged over the summer months rather than a 12-month period.

(6)Annualized self-employment income. Self-employment income that represents a household's annual support is annualized over a 12-month period, even when the income is received in a shorter period of time. For example, self-employment income crop farmers receive is averaged over a 12-month period when the income represents the farmer's annual support.

(A) When the household's self-employment income has been received for less than a year, the income is averaged over the period of time received and the monthly amount projected for the coming year.

(B) When the household's self-employment income has been received for a short time and there is insufficient data to make a reasonable income projection, the worker does not consider income from this source until the benefit renewal or certification renewal month. At benefit renewal or certification renewal, the worker averages the income over the number of months received until a full year's information is available.

(7)Determining net monthly annualized self-employment income. When the household has business expenses associated with its self-employment income, the business expenses are deducted before determining if the household meets the maximum gross income standards, per Oklahoma Human Services (OKDHS) Appendix C-3, Maximum Food Benefit Allotments and Standards for Income and Deductions. When the household does not have business expenses, the gross self-employment income is used.

(A) When the household filed an income tax return on its self-employment income for the most recent year, the worker uses the gross self-employment income shown on the income tax return, subtracts 50 percent of the income for claimed business expenses, and divides the net self-employment income by the number of months to be averaged, per 7 C.F.R. § 273.11(b)(3)(iv).

(B) When the household did not file an income tax return on its self-employment income for the most recent year, the worker uses (i) through (iii) of this subparagraph to determine the net monthly selfemployment income.

(i) The worker computes gross self-employment income, including capital gains, using the household's self-employment business records or employer records, when applicable.

(ii) When the household declares incurred business expenses, the worker subtracts 50 percent of the gross self-employment income as business expenses, per 7 C.F.R. § 273.11(b)(3)(iv). When the household did not incur business expenses, a business expense deduction is not given.

(iii) The worker then divides the net self-employment income by the number of months to be averaged.

(C) The worker adds monthly net self-employment income to all other earned income the household receives. When the household reports a loss instead of a profit on the business, the worker does not deduct the loss from other household income.

(i) The worker adds the total monthly earned income, less the earned income deduction per OKDHS Appendix C-3 to all other monthly income the household receives.

(ii) The worker subtracts the standard deduction, dependent care, and shelter costs as for any other household, per OAC 340:50-7-31, to determine the monthly net income of the household.

(8)Anticipated income. When a household who would normally have the self-employment income annualized experiences a substantial increase or decrease in income, the worker does not calculate self-employment income on the basis of prior earnings, such as income tax returns. Instead, the worker calculates the self-employment income using only the income that can reasonably be anticipated to project future earnings. The worker uses procedures in (b)(7)(B) and (C) of this Section to determine net monthly self-employment income.

(9)Household with income from boarders. A household that operates a commercial boarding house may be considered a food benefit household and self-employed per (7) of this subsection. A household with boarders or roomers that is not a commercial boarding house may receive food benefits per (A) through (C) of this paragraph.

(A) The worker excludes a person paying a reasonable amount for room and board from the household and counts payments from the boarder as self-employment income when determining the household's eligibility and benefit level.

(i) The income from a boarder includes all direct payments to the household for room and meals, including contributions to the household for part of the household shelter expense.

(ii) The worker does not count expenses a boarder pays directly to someone outside the household as income to the household.

(B) The worker excludes 50 percent of the boarder payment as the cost of doing business.

(C) The worker includes the net income from self-employment with other earned income minus the earned income deduction.

(i) The worker computes the shelter cost the household incurs, even when the boarder contributes part of the shelter expense, to determine if the household qualifies for a shelter deduction.

(ii) The shelter and utility cost does not include any expense billed to and directly paid by the boarder to a third party.

(10)Rental income. The worker considers income received from rental property as self-employment income.

(A) The worker treats rental income as earned income when a member of the household actively manages the property an average of at least 20 hours per week.

(B) When a household member does not actively manage the property at least 20 hours each week, the worker considers the income as unearned. The person is eligible for business expenses per (7) of this subsection.

Okla. Admin. Code § 340:50-7-30

Amended at 9 Ok Reg 3843, eff 8-24-92 (emergency); Amended at 10 Ok Reg 1821, eff 5-13-93; Amended at 17 Ok Reg 473, eff 10-12-99 (preemptive); Amended at 19 Ok Reg 1767, eff 6-14-02; Amended at 23 Ok Reg 1896, eff 7-1-06; Amended at 24 Ok Reg 2187, eff 7-1-07; Amended at 25 Ok Reg 937, eff 6-1-08; Amended at 26 Ok Reg 840, eff 6-1-09; Amended at 27 Ok Reg 1241, eff 6-1-10; Amended at 28 Ok Reg 850, eff 6-1-11; Amended at 29 Ok Reg 794, eff 7-1-12

Amended by Oklahoma Register, Volume 34, Issue 24, September 1, 2017, eff. 9/15/2017

Amended by Oklahoma Register, Volume 36, Issue 24, September 3, 2019, eff. 9/16/2019

Amended by Oklahoma Register, Volume 41, Issue 23, August 15, 2024, eff. 9/14/2024