Income Tax Forms Used for Verification
FREE/REDUCED PRICE APPLICATIONS &
INCOME TAX RETURNS
Q: When can income tax returns be used?
A: Tax returns can be used when documentation of the previous year’s non-wage
Income is required. Net farm income from Schedule F or net business income
from Schedule C are frequent types of non-wage income reported on income tax
returns.
§ Use net business profit (loss) listed on Line 31 of Schedule C
§ Use net farm profit (loss) listed on Line 36 of Schedule F
§ Do not use Adjusted Gross Income, which combines wage and non-wage income and may include additional deductions not allowable in school meals programs.
Q: When can’t income tax forms be used?
A: The tax return cannot be used as documentation of wage income. Wage income
reported on the initial application must reflect income received during the prior
month. Households must report gross income listed on paycheck stubs.
§ Wages listed on Line 7 of the 1040 U.S. Individual Income Tax Return form may not include all gross wages. For example, pre-tax benefits are deducted from wages reported on Line 7.
§ In addition, wages reported on the previous year’s income tax return frequently differ from current year wages.
Q: What if one household member earns wages and another owns a business?
A: When applying for meals, the wage earner must report gross income earned
during the previous month. Net profit (loss) noted on Schedule C or Schedule
F can be used for the business/farm income.
§ Business/farm net losses are considered zero and cannot be deducted from wages.
Q: How do pre-tax benefits affect eligibility for free and reduced price meals?
A: Pre-tax income is not subject to taxation and therefore is not reported as wages on
Line 7 of the 1040 U.S. Individual Income Tax Return. Even though the income is
not taxed; income set aside for pre-tax benefits is part of gross household income
that determines eligibility. If pre-tax income is not included, a household may be
approved for benefits that it is not entitled to. For example, a household that pays
$5000 for childcare out of a pre-tax account must be treated the same as a
household that pays $5000 for childcare out of taxable income.
Q: Can income tax forms be used for verification purposes?
A: Net profit (loss) from Schedule C for business owners or Schedule F for
farmers can be used for documentation of non-wage income at the time of
verification.
Households can’t submit income tax forms as documentation of wages.
Documentation of income for wage earners must be based upon gross income
for any month between the month prior to application and verification.
Q: Are there any special situations?
A: Seasonal workers and others whose income fluctuates usually earn more money
in some months than in other months. Consequently, the previous month’s
wages may not reflect the household’s actual circumstances. In these
situations, the household may project its income and report this amount as its
current income. If the prior year’s gross income provides an accurate
reflection of the household’s current annual rate of income, the prior year may
be used as a basis for projecting current income.
Q: Where can I find additional information about this topic?
A: Refer to the USDA manual Eligibility Guidance for School Meals Manual.
Copies can be downloaded from the MDE website – Food & Nutrition.
Minnesota Department of Education – Food and Nutrition Service 10/05
MDE E-mail Updates