821-2 VERIFICATION OF SELF-EMPLOYMENT INCOME

Verification of self-employment income may come in many different forms. Verification may include records showing the history of business records, tax forms, or documentation for what is expected to be received and spent in the future. Verbal verification can be received from collateral contacts or the self-employed individual.

The method by which an individual’s net self-employment income was determined should be fully documented in the case file so that anyone reviewing the information will be able to determine how the amount was calculated.

If the information received is questionable, additional clarification and/or verification must be sought. Administrative Procedures MS 105-1 C provides policy on when information is considered questionable.

821-2 A.   CLIENT STATEMENT

Client statement of adjusted gross self employment income is acceptable verification.

821-2 B.   SELF-EMPLOYMENT BUSINESS RECORDS

The self-employed person’s written business records are acceptable methods of verification.

The self-employed person has primary responsibility to provide the income and expense types and amounts in an organized manner. Acceptable business records range from informal personal records to professionally prepared documents. If written business records are not maintained or readily available, the statement of the self-employed person or collateral contact may be used.

The verification used must include sufficient information to determine the net profit.  Individual receipts for income and costs may be requested if additional information is needed or any of the items listed are questionable.

821-2 C.   TAX FORMS

Income tax documents provide acceptable documentation of self-employment income and adjustments, or allowable business expenses. Such forms include: Form 1040 Individual Income Tax Return, Schedule C Profit or Loss from Business, Schedule E Supplemental Income and Loss, Schedule F Profit or Loss from Farming, Form 1065 Partnership Return of Income including Schedule K-1 Partner’s Share of Income, and Form 1120-S, Income Tax Return for an S-Corporation including Schedule K-1 Shareholder’s Share of Income.

821-2 D.   THIRD PARTY CONTACTS

Written or verbal statements from a third party verifying the self-employed person’s income or expenses are acceptable. This may include verification from city or borough offices, taxicab stand owners, parent companies, fish processors/canneries, and Department of Fish and Game.