The local department shall compute net monthly income in the following manner: Compute gross monthly income; Subtract from the gross self-employment income the amount allowed by Regulation .39B and C of this chapter; Subtract an earned income deduction of 20 percent of gross monthly earned income; Subtract a standard deduction in the amount stated in Schedule E of Regulation .45 of this chapter; Subtract that portion of medical expenses as defined in Regulation .33 of this chapter in excess of $35 per month incurred by a household member who is elderly or disabled as described in Regulation .02B of this chapter; Subtract payments for the actual cost paid by the household to someone outside the household for the care of a child or other dependent as described in Regulation .34 of this chapter; Subtract payments for child support for an individual living outside the home as set forth in Regulation .35 of this chapter; Subtract a homeless shelter allowance as described in Regulation .36 of this chapter for homeless households in the amount stated in Schedule J in Regulation .45 of this chapter; and Subtract any excess shelter cost as follows: Excess shelter cost is calculated as the amount of the shelter cost, as described in Regulation .37 of this chapter, which exceeds 50 percent of the amount of income remaining after the deductions in §§A—H of this regulation are allowed, Subtract the excess shelter cost not to exceed the maximum in Schedule F of Regulation .45 of this chapter, and If the household contains an elderly or disabled member as described in Regulation .02B of this chapter, the total amount of the excess shelter cost is subtracted.