INSTRUCTIONS TO STAFF 340:10-3-32
1. A person acting in the role of spouse per Oklahoma Administrative Code
(OAC) 340:10-3-57(e)(3) must not be considered as a roomer or boarder.
2. When the client does not manage the rental property, it is considered unearned self-employment. The client is then entitled to have 50 percent of his or her business expenses subtracted from the income, but is not eligible for a work related expense deduction.
3. (a) The worker divides the person's self-employment income by 12, or the number of months the business has existed when less than 12 months, to determine monthly self-employment income. When the gross self-employment income shown on the income tax return or business records is not representative of the person's current situation because of a substantial increase or decrease in the person's self employment income, refer to (2)(C) of this Section.
(b) When the person did not incur business expenses, the worker does not subtract 50 percent of the person's gross self-employment income as business expenses.
(c) Self-employment income tax return forms include, but are not limited to:
(1) Form 1040 with Schedule C for sole proprietors and some limited liability companies;
(2) Form 1065 with Schedule 8865 K-1 for partnerships;
(3) Form 1120-S with Schedule K-1 for S corporations; or
(4) Form 1040 with Schedule F for farmers.
(d) After determining the person's net monthly self-employment income, the worker subtracts applicable earned income deductions per
4. Examples of self-employment income calculations include, when:
(1) a crop farmer does not receive income from crops every month, but this income represents the farmer's annual support. Income from this source is averaged over a 12-month period; or
(2) self-employment income was received from February 18 to the application month of November, the income is averaged for nine months, February through October. It is correct to count the first month of income received through the last complete month when computing an annualized figure for new self-employment income.
5. (a) When the person is considered self-employed as a contract laborer, receives a set salary that does not vary, and has been employed for a period of time where sufficient data is available from the employer to make a reasonable income projection but not sufficient data to annualize income, earnings are anticipated by multiplying the amount received by the appropriate conversion factor. For example, the person begins a new self-employment contract labor job. He or she works 40 hours per week at $10 per hour. He or she has received two weekly checks in the amount of $400 each. The month is not over, but the employer states the person will continue to be paid $400 per week. It is correct to use $400 X 4.3 to anticipate the person's monthly income.
(b) At renewal, the worker averages the income over the number of months received until a full year's information is available.
6. When the employer adds money to the employee's gross income as a benefit allowance to pay for a reimbursable expense, such as insurance, the worker counts the regular gross earnings plus any excess money left after deducting the insurance or other reimbursable expense from the benefit allowance. For example, when a person:
(1) receives a $300 benefit allowance to purchase insurance and uses the entire amount to purchase the insurance, none of the benefit allowance is counted as income;
(2) receives a $300 benefit allowance but only purchases $280 in insurance, the worker counts the remaining $20 as income; or
(3) has an option of purchasing insurance with a $300 benefit allowance if insurance is purchased or $150 if insurance is not purchased, the worker counts the $150 as an excess benefit allowance when the person chooses not to purchase insurance.
7. (a) Refer to
OAC 340:10-3-31 to determine when contract income is considered self-employment income. Refer to
OAC 340:10-3-32(1) when self-employment rules apply.
(b) Income from contract employment received by persons, such as school employees is annualized over a 12-month period even when the income is received over a period of time shorter than 12 months.
8. Refer to