Merchandise Sales
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This section includes information about income derived from the sale of merchandise.
Policy
Income received from the sale of merchandise, less allowable business expenses, is countable.
Self-employed participants may be eligible for a 40% expense deduction from income. To be eligible for the 40% Self-Employment Expense Deduction, only one allowable expense has to be verified. When self-employment expenses are not verified using the verification process, eligibility is determined without those expenses.
The sale of merchandise includes, and is not limited to any of the following:
●Tupperware
●Avon products
●Cosmetic sales
●DoTerra oils
●Mary Kay
The sale of merchandise is considered self-employment when it meets the self-employment definition. Self-employment is defined as working for oneself rather than working for an employer.
Countable income is used to determine an income budget. (See Income Budgeting to see how FAA determines the income budget.) FAA needs to know about income that is both countable and not countable to determine whether a budgetary unit’s expenses are exceeding their income. (See Income Eligibility for more information about how FAA uses countable and not countable income.)
Verification
The participant has the primary responsibility for providing verification. (See Participant Responsibilities – Providing Verification for additional policy.)
For NA, all of the following income is required to be verified before eligibility is determined:
●Reported on a new application, during the interview of a new application, or changes reported before the eligibility determination of a new application.
●Changes after an eligibility determination of a new application (e.g., a renewal application, mid approval contact, etc.) and any of the following apply:
The source of the income has changed.
The income is questionable(g) or unclear(g).
The reported income amount has changed by $51 or more.
The previous verification in the case file is more than 59 calendar days old.
For CA, all income is required to be verified before determining eligibility.
Self-employed participants may be eligible for a 40% expense deduction from income. To be eligible for the 40% Self-Employment Expense Deduction, only one allowable expense needs to be verified. When self-employment expenses are not verified using the verification process, eligibility is determined without those expenses.
Examples of verification that can be used for Merchandise Sales include, and are not limited to, any of the following:
●Bookkeeping records
●Business ledgers listing income amounts received and expenses incurred
●Actual receipts
●Contracts for work
●Statements from patrons and companies
●Most recent Internal Revenue Service (IRS) U.S. Individual Income Tax Return (1040) form. Below are common IRS Schedule forms that the participant may provide in addition to the 1040:
Schedule C, Profit or Loss From Business
Schedule E, Supplemental Income and Loss
Schedule F, Profit or Loss from Farming
Schedules B-1, C, D, K, K-1, K-2, K-3, and M-3 of IRS U.S. Return of Partnership Income (1065) form (See Limited Liability Company (LLC) Definition for more information about LLCs.)
NOTE The most recent IRS 1040 and Schedule forms can be used as verification of self-employment income and expenses when the participant indicates it accurately reflects the participant's current income.
●Rent or mortgage receipt for business property
●Property tax statements for business property
●Utility costs for business property
●Cleaning cost bills for business property
●Business location and equipment maintenance
●Personal records indicating personnel salaries or costs of outside labor, such as canceled checks and payroll checks
●Participant’s statement for self-employment income, when one of the following apply:
Other attempts to obtain verification have failed.
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
NOTE Participant statement verification may be used to verify self-employment expenses unless questionable(g).
Legal Authorities
AAC R6-12-501B
A.R.S 46-292-P01
7 CFR 273.9(b)
7 CFR 273.9(b)(1)(ii)
8 U.S.C. 2014(d)
last revised 10/02/2023