Definition of Income

Entity

Group LTD

What Income Figure to Use

Non-owner Employee​	Income shown on Form 1040 for most recent year including all schedules, W-2s of the proposed insured OR If income is from salary only, income from paystub showing a minimum of six months of YTD income OR If 1099 income, income shown on 1040 to include related Schedule C​	W-2 box #5 labeled “Medicare Wages and Tips” OR Project year to date salary to determine annual income. Do not project commissions or bonuses. OR 1099’s report income from independent contractors. Most likely filed under a Schedule C, but may be reported as “other income”​
Owner of Sole Proprietorship​	​Income from Form 1040 and Schedule C​​	​Schedule C line #31​
C Corporation Owner	​Income shown on W-2s of the proposed insured. ​	W-2 box #5 labeled “Medicare Wages and Tips” and owner’s share of Form 1120 line #30​
​S Corporation Owner	Income shown on 1040, W-2s, and Schedule E OR Corporate Tax Return Form 1120S and Schedule K-1 (1120S)​	W-2 box #5 plus Schedule E Nonpassive income, subtract Nonpassive loss, Section 179 Expense.2 “Passive” may be counted as unearned income. OR Add 1120S line 7 (owner’s share shown on W-2) and K-1 box number 1, subtract line 11​
​​​Partnership	Income shown on 1040 OR Partnership Form 1065, Schedule K-1 (1065) ​	Schedule E Nonpassive income, subtract Nonpassive loss, Section 179 Expense.2 “ Passive” may be counted as unearned income. Add K-1 lines 1 and 4, subtract line 12​
​​​​LLC or LLP	​The type of business tax return filed for the LLC or LLP will govern the income to insure	Refer to the appropriate requirements above for regular corporations and partnerships