What is considered gross income if you are self-employed?

[capamando]

Hello,

The last time that I met with my attorney, well actually with one of her assistants, he told me that my expenses under my business are not subtracted from my deposits in order to determine my gross income. This makes no sense to me. How can you not subtract the cost of supplies, parts etc. from the $$$ coming in? I can see that it would make sense if you are an employee but not if you are self employed. Can someone explain this to me? I am still under the income level to qualify for chapter 7 but this issue is bothersome to me.

Thanks

[justbroke]

Your gross income is your gross sales. On the Bankruptcy Forms, there are places to reduce your earnings by expenses and cost of goods sold. No different, really, than doing your taxes.

For example, on Official Form B22A (the Means Test for Chapter 7), line 4 deals with income from operation of a business. Line 4a is the gross receipts. Then you subtract line 4b which contains the "ordinary and necessary" business expenses. This yields line 4c which is the total business income.

I think you misunderstood him, or you two need to sit down face to face.

[capamando]

Your gross income is your gross sales. On the Bankruptcy Forms, there are places to reduce your earnings by expenses and cost of goods sold. No different, really, than doing your taxes.

For example, on Official Form B22A (the Means Test for Chapter 7), line 4 deals with income from operation of a business. Line 4a is the gross receipts. Then you subtract line 4b which contains the "ordinary and necessary" business expenses. This yields line 4c which is the total business income.

I think you misunderstood him, or you two need to sit down face to face.

Justbroke,

Thanks for your answer...that makes sense but forgive me for my ignorance but do I have to do the Means Test if our income falls under the state guidelines?

Thanks

[justbroke]

Thanks for your answer...that makes sense but forgive me for my ignorance but do I have to do the Means Test if our income falls under the state guidelines?

Contrary to popular belief, an under the median income filer still completes the first few sections of the "Means Test" (Official Form B22A/B22C). An under-the-median filer just don't have to complete the entire Means Test (Parts I-VII).

So you'd fill out Part I, II and III to actually determine that you are under-the-median.

I know that everyone goes around saying that under-the-median income filers don't do the Means Test, but they actually are required to complete almost half of it. Only non-consumer filers, disabled veterans, and certain military members (on active duty status), need not do anything more than Part I of the Means Test, but even they need to submit one.

[capamando]

Justbroke,

Thank you again for your help. I will follow up with my attorney.