Means Test Income Question

[crescentmoon]

I've been reading the NOLO book and have a question about income. I certainly understand how to calculate my husband's income, although I'm confused as to whether the housing allowance he receives is to be considered gross income or not.

I'm really confused as to how to calculate my business income. Do I count my gross income without accounting for the expenses? This seems totally unfair as, when counting expenses, there is almost no income for the business (the business will take a loss this year). But, if I have to count the gross receipts as income and not account for the expenses, we'll be over the median (especially if we have to count our income tax refund as income, as well as any student loan refunds as income).

I will be using an attorney, but I just want to wrap my head around these number.

Any thoughts?

KBB

[jadams]

You don't use gross receipts. As you said, that wouldn't be realistic or fair. Make a monthly profit and loss. Use that number for that month's income.

Just keep your expense deductions reasonable and provable. Things like rent, cost of goods sold, payroll to other employees etc.

It should also line up with what your schedule C said on your tax return.

Better yet if you can show even longer back so you can prove you didn't suddenly increase expenses to fall under the mean. I provided my attorney with P&L records back more than a year and a half to show that the expenses I was using to reduce my gross were the same or less than I had been paying for quite some time.

[crescentmoon]

Excellent! Thank you!

KBB