Kansas Family Medical Assistance
Manual (KFMAM)
Eligibility Policy - 11/22/2024
06200
6210 Tax Return Filed - When a tax return has been filed, the countable amount of self-employment tax that the individual paid must be deducted from the gross self-employment income. The Schedule 1, also known as Form 1040) or Schedule SE is used to determine the amount of self-employment tax paid located on the deductible part of self-employment tax line. This amount should be deducted from the amount of income taken directly from each schedule where applicable. The following outlines which line on each schedule is used for each type of business:
• Business income – Net profit amount from Schedule C or C-EZ
• Rental real estate, partnerships, S-corporations – Total rental real estate amount from Schedule E
• Farm income – Net farm profit from Schedule F
• Capital Gains – Capital Gains amount from the 1040 divided by 12
• Other Gains – Other Gains amount from the 1040 (Schedule 1) divided by 12
When the tax return reports more than one business, the self-employment tax must only be deducted from one of the self-employment businesses, preferably the business that has a net profit larger than the amount of the self-employment tax.
When a loss is reported on one or more of the schedules, it is to be treated as zero income for the eligibility determination and cannot be deducted from another source of income, even if the other source is another form of self-employment.
Provided the return reflects a full year of self-employment earnings, a twelve month average shall be established.