Sole proprietor and means test

[WorkingItOut]

If you are a sole proprietor, how do you handle the income on the means test? What I mean is, can you subtract your tax deductible expenses or do you have to include gross receipts?

Most of my income comes from a regular salaried job, but I have some extra income on the side that is pretty much wiped out when I deduct expenses, but I'm unclear as to whether I can do that on the means test or not. Thanks!

[PoGirl]

You would show both the income and the expenses on the means test.

[justbroke]

As PoGirl wrote, you handle business income just as you do in your accounting. Your income from your business is the gross income less expenses. In the means test, on Forms B22A and B22C, they ask for business gross income and then the expenses for operating the business.

3. Income from the operation of a business, profession, or farm. Subtract Line b from Line a and enter the difference in the appropriate column(s) of Line 3. If you operate more than one business, profession or farm, enter aggregate numbers and provide details on an attachment. Do not enter a number less than zero. Do not include any part of the business expenses entered on Line b as a deduction in Part IV.

a. Gross Receipts
b. Ordinary and necessary operating expenses

c. Business income (a - b)

[WorkingItOut]

Thank you!

[justbroke]

No Problem. That's what we are here for!