FAA4.J Self-Employment Income (SEEI SEEW) : 04 Self-Employment Definition
Self-Employment Definition
(01/01/20 - 12/31/20)
Self-employment is defined as working for oneself rather than working for an employer.
NOTE Corporations or Limited Liability Companies(g) that file taxes as corporations are not considered self-employment. (See Dividends and Royalties)
Individuals who are self-employed generally file federal income tax returns that identify their self-employment status. However, when tax returns are not filed, it may be necessary to inquire further into the situation to determine when a participant is self-employed.
When determining whether income meets the self-employment definition, all factors relating to the income source must be explored with the participant. The factors to consider include but are not limited to the following:
Participant’s intention is to make a profit or produce income as a regular occupation.
Participant uses the income for their livelihood.
Participant represents to others as being engaged in a business of selling of goods or providing a service.
Participant is available to take on additional clients.
Participant has documentation that supports their claim of self-employment.
Participant is a member of a business or trade association.
Participant does not have an employer - employee relationship. (See Wages and Salaries for additional information on an employer - employee relationship)
A single factor is not always sufficient to determine whether a person is self-employed. FAA staff must explore all factors to determine whether an income producing activity is self-employment.
Self-employment may include, but is not limited to the following situations:
Income received directly from one's own business, a sole proprietorship, as an independent contractor, or as a member of a partnership.
Income received from odd jobs or from irregular and varied activities.
Income received from providing services.
Income received from selling or reselling goods, including personal property and items purchased for the purpose of resale.
Income received from working for others on a commission or piecework basis.
Self-employed participants may or may not incur allowable self-employment expenses.
NOTE The case file(g) must be documented with the reason the income was determined as self-employment income or earned income.
(See Self-Employment Types for additional policy and procedures)
For examples, see the following:
When a participant does not meet the definition of self-employment, see Earned Income Types.