016.20.99 Ark. Code R. 027
Summary of Changes
* This section of policy has been generally updated.
* Some sections have been rewritten for clarity.
* Information about the AFDC Program has been replaced with information about the TEA Program.
* The word "benefits" has replaced the word "allotment."
Specific changes are explained below:
FSC 5300 - An example has been added to illustrate the circumstances under which money deposited in a checking account will be counted as income.
FSC 5405 - The Indian income exclusions have been updated. A new item 28 has been added. This item explains the exclusion of funds in individual development accounts funded under the TANF block grant program.
FSC 5410 - This section, Recoupments, has been rewritten for clarity.
FSC 5412 - A statement has been added to this section to clarify how to handle the income, received by the third-party beneficiary.
FSC 5502 - Information has been added about bonuses received more frequently than once a year.
FSC 5505 - Instructions have been added for handling income received under a contract that covers a period less than 12 months.
FSC 5507 - Information has been added about allowances received by military personnel.
FSC 5600 - 5643 - These sections have been rewritten and renumbered. The new policy sections are:
* FSC 5630 Self-employment Income
* FSC 5631 Partnerships
* FSC 5632 Contractors
* FSC 5633 Corporations
* FSC 5640 " Capital Gains
* FSC 5650 Special Payments to Farmers
* FSC 5660 Determining Self-employment Income
* FSC 5661 Annualizing Self-employment Income
* FSC 5662 Self-employment Income that is not Annualized
* FSC 5662.1 Self-employment Enterprises in Business for Less than One Year
* FSC 5662.2 Self-employment Income that Increases or Decreases Substantially
* FSC 5662.3 Anticipating Capital Gains
* FSC 5663 Costs of Producing Self-employment Income
* FSC 5663.1 Rent or Mortgage, Taxes and Insurance Payments as Costs of Producing Income
* FSC 5663.2 Utilities as a Cost of Producing Income
* FSC 5664 Calculating Net Self-employment Income
* FSC 5664.1 Separate Enterprises
* FSC 5664.2 Budgeting Income Received from a Partnership
* FSC 5670 Farm Loss Deductions
* FSC 5680 Reported Changes in Self-employment Income
* FSC 5690 Verification/Documentation
* FSC 5691 Certification Periods
FSC 5701.1 - This is a new section. It contains information about TEA diversion assistance.
. FSC 5701.2 - This is a new section. It contains information about TEA employment bonuses.
FSC 5701.3 - This is a new section. It contains information about TEA extended support payments.
FSC 5704.4 - This section now provides information about anticipating child support income.
FSC 5704.5 - This is a new section. It provides information about verifying child support income collected by OCSE.
FSC 5704.6 - This is a new section. It provides information about verifying child support income not collected by OCSE.
FSC 5704.7 - This is a new section. It provides information about documentation of child support income.
FSC 5708 - Information about guardianship payments to relatives has been added to this section.
FSC 5723 - Information about VA aid and attendance has been added to this section.
Inquiries to: Betty Helmbeck, Food Stamp Section, (501) 682-8284
BANKRUPTCY
This- section describes income that must be considered when determining food stamp eligibility and benefit level. It explains which income is to be excluded during eligibility determination and which income must be included in the eligibility determination. Verification guidelines for countable income are provided.
Income is classified as earned income or unearned income. The household is required to report all Income at the time of application and any income anticipated to be received during the certification period. All earned and unearned income received on each household member is counted as income unless the income is excluded as specified in FSC 5400.
Filing for bankruptcy has only a limited effect on the amount of income counted in a household's food stamp budget. However, the household's bankruptcy papers should be examined carefully to determine if the terms of the settlement will have any impact on the household's resource and/or deductible expenses.
After a household files for bankruptcy, the gross amount of any income (earned and unearned) received by the household will continue to be counted in the budget. Sometimes, the household's income goes to a trustee and the trustee pays the household's bills and gives the household a living allowance. The living allowance has already been counted as part of the household's gross income and so would not be counted as income again.
When a self-employed household (including any farmer) declares bankruptcy and continues to do the same type of business, the self-employment income continues to be counted in the food stamp budget. Often when a business or farm declares bankruptcy but continues to operate, some of the assets of the business are sold to pay the debts of the business. If the business owner (or farmer) sells property or equipment used in their business and uses the proceeds to pay off a loan, the money is counted as income in the self-employment enterprise. (See Capital Gains, FSC 5640.) Even if the proceeds of the sale are diverted to a bank to repay a loan, the money is still counted as income in the self-employment enterprise.
If the household is no longer allowed to continue the self-employment enterprise, the self-employment income 1s dropped from the food stamp budget. When the business no longer continues to operate and business collateral is turned over to a bank, either voluntarily or through repossession, it becomes the legal property of the bank. Even if the bank sells the collateral (land, equipment, etc.) and uses the proceeds to pay off a business loan, the proceeds of the sale are not counted as Income in the self-employment enterprise.
When bankruptcy is declared, a creditor (or lender) may write off all or part of a loan or "forgive" the outstanding balance or the household's current payment may be recalculated. If the amount due on a deductible expiense7 (i.e., house payment) changes as a result of a bankruptcy, the worker will verify the amount currently incurred for the expense. The current amount will be used in the food stamp budget. Past due amounts will not be allowed even if included with current payments or even if paid through the court directly to the creditor. See FSC 6710.
A bankruptcy settlement normally states the household's resources, which resources will be disposed to cover the household's debts, and under which conditions the household may retain other resources. If there are questions about whether resources retained by the household are accessible, a legal opinion should be requested through normal channels.
Income eligibility standards are based upon a household's classification as regular or aged/disabled or categorically eligible. See FSC 1910 for an explanation of an aged/disabled household. See FSC 1920 for an explanation of a categorically eligible household. All other households are classified as regular households.
An aged/disabled household must meet only the net income eligibility standards. Net monthly income is computed by adding ail non-excluded income for all household members and subtracting all allowable deductions.
A regular household must meet both the net income eligibility standards and the gross income eligibility standards. Gross monthly income is all non-excluded gross earned and unearned income for all households members. Net income is the household's income after subtracting all allowable deductions.
A categorically eligible household does not have to meet either the gross or net income eligibility standards.
Household income is any gain or benefit (usually in the form of money) from any source that is not excluded. See FSC 5400 for an explanation of excluded income.
** Example: A woman applies for food stamp benefits for herself and her
children. She is separated from her husband; however, each month he deposits $1,500 in the couple's joint checking account. The money deposited in the checking account is unearned income for food stamp purposes.
Only the following types of income are excluded when determining food stamp, eligibility:
Child support payments obligated to OCSE to maintain eligibility
Costs of producing self-employment income
Earnings of a child who attends school
Educational income paid under Title IV or BIA program
Educational costs
By Federal statute
Inkind benefits
Irregular income
Loans
Non-recurring loan payments
Recoupments
Reimbursements
Payments for third party beneficiaries
Vendor payments
Earned income tax credits
See FSC 5401 - 5414 for a full explanation of excluded income.
Child Support payments received by TEA recipients that are obligated to the Office of Child Support Enforcement (OCSE) to maintain TEA eligibility will not be counted as income. This exclusion applies even when such payments are not actually turned in to OCSE. It also applies to payments received by former AFDC and/or TEA recipients when held by OCSE and applied to previous AFDC and/or TEA arrearages.
Any child support payment received through an interception of a State or Federal income tax refund 1s excluded as non-recurring lump sum payments. Any child support payment received through interception of a lump sum Worker's Compensation payment is also excluded as a non-recurring lump sum payment. See FSC 4950 for instructions on handling lump sum payments.
Also see FSC 5704 for an explanation of child support"to be counted as income.
The costs of producing self-employment income are excluded from the household's gross self-employment Income. See FSC 5663 for instructions.
The earnings of elementary or secondary school students age 17 or younger who continue to live with a parent and attend school classes at least half-time will be excluded as income.. This includes students who attend classes to obtain a general equivalency diploma (GED) so long as the GED program is recognized, supervised or operated by the student's state or local school district. Half-time status will be defined by the school.
The earned income of a high school student must be counted beginning the month after the student turns 18. This applies regardless of marital status so long as the student continues to live with a parent.
This exclusion does not apply to students who have established a residence separate from their natural, adoptive or step parent or from the adult household member who exercises parental control over the student.
This exclusion applies during school breaks and summer vacation if the student plans to attend school when regular sessions resume. If the child's portion of the earned income cannot be determined, the income must be evenly prorated among all the individuals who earned the income. The child's pro rata share will be excluded as income.
Educational income will be totally excluded when paid under Title IV of the Higher Education Act or Bureau of Indian Affairs Student Assistance Programs. Other types of educational income will be excluded to the extent the income is earmarked for or used by a student for allowable educational costs. See FSC 1622.3 for instructions.
Any Income specifically excluded for food stamp purposes by any Federal statute is cot counted as income. These income exclusions are listed beio'w: Refer to FSC 4450 for an explanation of resources excluded by law.
Exception: On the job training (0JT) payments provided under Section 204(5) of Title II of the JTPA are counted as income unless the payee is a dependent less than 19 years of age. If the payee is a dependent less than 19 years of age, OJT payments are excluded.
The JTPA exclusion applies to on-the-job training payments received under the Sumraer Youth Employment and Training Program.
*[GREATER THAN]; P.t. 101-610, Section 117(d), 11-28-90, provides that the JPTA income exclusion applies to projects conducted under Title I of the National and Community Services Act of 1990 as if such projects were conducted under the JTPA described in item 5 above. This includes:
-Payments received under the Alaska Native Claims Settlement Act ( P.L. 92-203, Section 21(A).
-Payments received from the disposition of funds to the Grand River Band of Ottawa Indians ( P.L. 94-540).
-Income from certain submarginal land held in trust for certain Indian tribes ( P.L. 94-114, Section 6). The tribes that may benefit are:
. Bad River Band of the lake Superior Tribe of Chippewa Indians
of Wisconsin . Blackfeet Tribe . Cherokee Nation of Oklahoma . Cheyenne River Sioux Tribe . Crow Creek Sioux Tribe . Lower Brule Sioux Tribe . Devil's Lake Sioux Tribe . Fort Belknap Indian Community
-Payments by the Indian Claims Commission to the Confederated Tribes and Bands of the Yakima Indian Nation or the Apache Tribe of the Mescalero Reservation ( P.L. 95-443).
-Payments to the Passamaquoddy Tribe and the Penobscot Nation or any of their members received pursuant to the Maine Indian Claims Settlement Act of 1980 ( P.L. 96-420, Section 5).
-Per capita payments of $2,000 and less made under Public Law 98-64 from funds held in trust by the Secretary of Interior.
-Under 25 USCS 1408 (as amended by P.L. 93-134, P.L. 97-458 and ..:;-, P.L. .103-65, Section 13736, 10/7/93) interests of individual
*"** " Indians in trust or restricted lands will not be considered a resource and up to $2,000 per calendar year of income received by Indians from such interests will be excluded as a resource and as income. Interests include the Indian's right to or legal share of the trust or restricted lands. The exclusion applies to each individual Indian who has an interest.
-Payments of relocation assistance to members of the Navajo and Hopi Tribes ( Pub. L. 93-531).
-Payments to the Turtle Mountain Band of Chippewas, Arizona ( P.L. 97-403).
-Payments to the Blackfeet, Grosventre, and Assiniboine tribes (Montana) and the Papago (Arizona) P.L. 97-408).
-Per capita and interest payments made to the Assiniboine Tribe of the Fort Belknap Indian Community and the Assiniboine Tribe of the Fort Beck Indian Reservation ( P.L. 98-124, Section 5).
-Per capita and interest payments made to the Red Lake Band of Chippewas ( P.L. 98-123, Section 3, 10 /13/83).
-Payments to the Saginaw Chippewa Indian Tribe of Michigan ( P.L. 99-346, Section 6(b)(2)).
-Per capita payments to the Chippewas of Mississippi ( P.L. 99-377, Section 4(b), 8 /8/86).
-Old Age Assistance Claims Settlement Act, provides that funds made to heirs of deceased Indians under this Act except for per capita shares in excess of $2,000 ( P.L. 98-500, Section 8, 10 /17/84).
-Payments to the Puyallup Tribe of the State of Washington (P.L. 101-41, 6-21-89).
-Payments under the White Earth Reservation Land Settlement Act of 1985 to the White Earth Band of Chippewa Indians in Minnesota ( P.L. 99-264).
-Payments under the Seneca Nation Settlement Act of 1990 to members of the Seneca Nation (P.L. 101-503).
-Funds appropriated in satisfaction of judgements awarded to the Seminole Indians in dockets 73, 151, and 73-A of the Indians Claims Commission.
-Funds distributed or held in trust for members of the Chippewas of Lake Superior ( P.L. 99-146).
-Assistance paid under P.L. 95-608, the Indian Child Welfare Act of 1978.
-Payments to the Confederated Tribes of the Colville Reservation under the Grand Coulee Dam Settlement Act (P.L. 103-436).
-Financial assistance avai1able to any Navajo or Hopi Indian pursuant to USCS 460d - 460d - 31.
. farm emergency exists due to a natural disaster, any payments made ::- pursuant to such determination will be excluded as income. See FSC 5650 for information about special payments to farmers.
P.L. 101-239, the Omnibus Reconciliation Act of 1989, Section 10405, excludes payments made from the Agent Orange Settlement fund or any other fund established pursuant to the settlement in the Agent Orange product liability litigation, M.D.L. No. 381 (E.D.N.Y.)
Exception: Payments made to Vietnam Veterans under the Agent Orange Act of 1991, P.L. 102-4, are not excluded as income. Veterans of the Vietnam War who are determined to be eligible for veterans' benefits as a result of exposure to Agent Orange will be issued payments in accordance with P.L. 102-4. See FSC 5723 for additional information.
...: household member. EIC payments are received as part of the employee's "**" "paycheck through a reduction in taxes withheld.
In-kind benefits are anv gain or benefit that is not in the form of money payable directly to the household. In-kind benefits to be excluded include:
Example: A farmer hires a household member as a laborer. The household is provided with a house on the farmer's farm and utilities are free of charge. The house and utilities are considered in-kind benefits and excluded as income.
Any recurring income that does not exceed $30 in a three-month period and that i s received too infrequently or irregularly to be reasonably anticipated is excluded as income. The three month period begins with the first month in which income is received from a particular source.
All loans, except deferred payment educational loans (not paid under Title IV of the Higher Education Act or a BIA program), are excluded as income. This includes loans from private individuals as well as commercial loans. A formal repayment agreement is not required. However, the intent to repay the loan must exist.
Example: A household member receives a loan from his brother in the amount of $1,600.00 for the purpose of buying a stereo system. The total amount of the loan is to be repaid. There were no documents signed since both parties verbally agreed to the terms. The amount of the loan ($1,600) is totally excluded as income to the household.
See FSC 5415 for instructions on verifying loans.
See FSC 4950, Lump Sum Payments, for instructions on handling the receipt of loans.
See FSC 1622.3 for instructions on handling deferred payment educational loans.
One-time lump sum payments are excluded as income. Examples of lump sum payments include, but are not limited to, the following payments:
TEA and SSI lump sum payments will be excluded as a resource £0 long as the recipient continues to be eligible for the benefit. See FSC 4451 for instructions. If the recipient is no longer eligible for TEA or SSI, the lump sum payment will be considered a resource.
Non-recurring lump-sum payments excluded as income must be counted as a resource in the month received, unless specifically excluded as a resource by Federal statute or regulation. See FSC 4450 for a list of resources excluded by law.
See FSC 4951 for instructions on handling lump-sum payments.
A recoupment is the voluntary or involuntary return of money from either an earned or unearned income source to repay a previous overpayment.
Monies currently being recouped are excluded as income if both of the following conditions are met.
Condition 1 - The income in which the overpayment occurred must not have been excluded in the food stamp budget at the time of the overpayment.
Example - The Office of Child Support Enforcement (OCSE) determined that a child support recipient was overpaid because she kept child support payments for a child who was receiving TEA cash assistance. These child support payments were excluded as income in the food stamp budget at the time this overpayment occurred. The household no longer receives TEA cash assistance but does continue to receive child support through OCSE. Part of this child support is being recouped to repay the overpayment. Since the child support payments were excluded as income in the food stamp budget at the time of the overpayment, the gross child support income (including the amount being recouped) will be counted in the current food stamp budget.
Condition 2 - For an overpayment in TEA for AFDO benefits. SSI benefits or HUD assistance, the overpayment must not be classified as an Intentional Program Violation (IPV). The agency administering the program makes the decision whether or not to classify an overpayment as an IPV. When the agency administering the program cannot or will not tell the county office worker if an overpayment is classified as an IPV, the county office worker will assume this condition has been met. This condition applies exclusively to overpayments in TEA (or AFDC), SSI and HUD assistance.
Any portion of a SSI benefit that is being recouped to repay an SSA overpayment will be excluded as income. Any portion of a SSA benefit that is being recouped to repay an SSI overpayment will be excluded as income. When monies are being recouped from an SSA check to repay an SSI overpayment, the portion being recouped will be excluded even if the SSI overpayment is classified as an IPV.
If the county office worker determines that 1) the income was not excluded in the food stamp budget at the time the overpayment occurred and 2) the overpayment is not classified as an IPV, the amount currently being recouped will be excluded as income.
"if "the income was excluded in the food stamp budget at the time the overpayment occurred OB if the overpayment is classified as an IPV, the full gross amount of the income (including the amount being recouped) will be counted in the food stamp budget.
Payments that cover past or future expenses are excluded as income if the payment does not exceed the actual expense and does not represent a gain or benefit. This does not apply to reimbursements for normal living expenses such as rent, utilities, personal clothing, etc.
NOTE: No portion of a TEA cash assistance payment will be excluded as a reimbursement for past or future expenses.
To be excluded, the payment must be for a specifically identified expense and used for the purpose intended. Any portion of the payment that exceeds the actual incurred expense or covers normal living expenses is considered income. A payment is not considered excessive unless the provider or the household indicates the amount is excessive. When a payment covers several expenses, each expense does not have to be separately identified provided the payment covers only normal living expenses.
Some, but not all, excludable reimbursements are listed below: *
See FSC 1622.3 for information about handling reimbursements received by students. See FSC 5713 for information about handling reimbursements for normal living expenses.
A beneficiary is an individual for whom a gain or benefit is intended.
-Ani individual who receives an entitlement check such as VA or SSA is usually the intended beneficiary. However, in some cases, the intended beneficiary does not actually receive the income. Another individual is designated to receive the income as a payee and to use the income for the care and maintenance of the intended beneficiary. In these cases the intended beneficiary is called a third-party beneficiary.
Money received for the care and maintenance of a third party beneficiary who is not a household member is excluded to the extent that the money is actually used for the care and maintenance of the beneficiary.
Example 1 - Mr. Smith is the payee for his brother's SSI check. Mr. Smith and his brother do not live together. Mr. Smith states that he uses all of the SSI check to meet his brother's needs. None of the SSI check would be counted as income in Mr. Smith's food stamp case.
If the intended beneficiaries of a single payment are both household and non-household members, any identifiable portion of the payment intended and used for the care and maintenance of the non-household member is excluded.
Example 2 - Ms. Conway receives Social Security for herself and one child. Ms. Conway is enrolled in college. She lives on campus and the child lives with its grandmother. The grandmother receives food stamps. Ms. Conway states that she keeps $100 of the social security payment and gives $100 to the grandmother to take care of her child. $100 will be counted in the grandmother's food stamp case.
If the non-household member's share cannot be readily identified, the payment will be evenly prorated among the intended beneficiaries. The amount excluded will be the lesser of the household member's pro rata share or the amount actually used for non-household member's care and maintenance.
Example 3 - Mrs. Scott receives child support in the amount of $500 for three children ages 6, 9 and 17. The seventeen year old child lives with an aunt. Mrs. Scott states that she gives the aunt some money for the 17 year old each month. The amount varies depending on the child needs. She estimates that it averages out to around $175 per month. The $500 child support payment is prorated among the three children. The pro rata amount of $166.66 is excluded from Mrs. Scott's income when calculating a food stamp budget.
** If the intended beneficiary is included in a household that receives food stamp benefits, the amount received by the beneficiary will be counted as income in that household's food stamp budget.
Vendor payments are monetary payments made by a non-household member for household expenses.
To be excluded as income, these payments must be made by a person outside of the household directly to the household's creditors or to the person or organization that is providing a service to the household.
The household must not have the option of receiving these funds directly.
Examples of excluded vendor payments appear below:
Demonstration project cash-out funds are also excluded as income. Cash-out funds are in-kind or vendor payments that have been converted to direct cash payments under the approval of a Federally authorized demonstration project. If the in-kind or vendor payment would have been excluded as income, the cash-out funds will also be excluded as income.
Under these provisions, money received from the Cash and Counseling Demonstration Project for Medicaid recipients is excluded as income. This program, which is operational in Arkansas, provides cash to certain medicaid recipients so they can purchase personal care services.
Vendor payments included as income are called Diverted Payments or Diverted Wages. See FSC 5706, Diverted Payments, or FSC 5506, Diverted Wages.
An earned income tax credit will be excluded as income regardless of how the tax credit is received.
An earned income tax credit may be paid in a lump sum payment or as part of the employee's regular wages. When an earned income tax credit is paid as part of the employee's regular wages, the credit will be excluded before the earned income deduction is allowed.
Example - If gross earnings were $500 every two weeks and the household receives a $40 earned income tax credit, the earned income deduction will be based on $460 gross earned income.
With the exception of loans, excluded income will be verified at initial application only when questionable. Loans received by a household are always to be verified at initial application.
Excluded income will be verified at recertification or reported change if:
See the Glossary, definition of "Verification" for additional information.
Acceptable verification of loans is a statement signed by both parties that indicates whether the payment was a loan and must be repaid. For student loans, see FSC 1622.3. In questionable cases (e.g. - recurring loans from the same source are declared), an affidavit will be requested from the lender. The affidavit must establish that the loan is currently being repaid or that future payments will be made in accordance with an established schedule.
Acceptable verification of other questionable income includes statements from the provider of the income that establish the source of income; or collateral contacts that establish the source of the income.
For questionable irregular income, the verification must also establish the amount of income and the frequency of receipt.
Document:
If an affidavit is requested, document the reason the loan was considered questionable.
All non-excluded income will be used to determine eligibility and food stamp benefit 1evel. Non-excluded 1ncome 1s di vided into two -categories, earned and unearned income. The distinction between earned and unearned income is necessary since a special deduction is applied to earned income. (See FSC 6200.)
Wages and salaries received for services performed as an employee are earned income. Self-employment income is also considered earned income. (See FSC 5600 for an explanation of the treatment of self-employment income.) Sources of earned Income are listed below in alphabetical order.
Annual Bonuses
Assistantships
Contractual Income
Diverted Wages
Military Pay
Sick Pay/Maternity Benefits
Rental Income (Under certain conditions as described in FSC 5715)
Training Allowances (Includes earnings under the JTPA Program)
VISTA payments
Wages and Salaries (Includes income from odd jobs)
Work Study
An explanation of each type of earned income is contained in the following sections of policy.
Bonuses are monetary payments given to an employee by an employer in addition to the pay due to the employee. For example, if a farmer gives an employee a $500 cash gift at Christmas in addition to the employee's regular pay, the $500 is considered a bonus.
Only bonuses is provided by an employer at approximately the same time and in about the same amount each year are annual bonuses. For example, if a factory has a good year and gives all employees a one-time $100 bonus, the $100 payment will not be considered an annual bonus because no additional payments are expected. Conversely, if a factory routinely gives all employees a ham and a $100 bonus at Christmas, the $100 payment would be considered an annual bonus. Bonuses paid less ** vfrequently than yearly will be excluded as non-recurring lump sum payments. Bonuses received more frequently than once a year are not considered to be annual bonuses. See FSC 7523.1 for instructions on handling these payments.
Annual bonuses that can be reasonably anticipated will be counted as earned income in the food stamp budget.
The household's certification period may be scheduled to end in the month before the household anticipates receipt of the annual bonus. This will allow the bonus to be counted in the month of receipt and deleted for any months remaining in the certification period.
Assistantships are monies paid to a student at the post-graduate level for performing duties for the university in which they are enrolled. Such duties may include teaching under-graduate classes or correcting test papers. Assistantships are counted as earned income. Any portion of the assistantship paid under Title IV funds will be excluded as income. See FSC 1622.3.
Employees who derive their annual income under contractual arrangements must have their income prorated over a 12 month period. A contractual arrangement exists if the employee and employer have a written agreement that stipulates, at a minimum, the annual or monthly salary. Individuals paid on an hourly or piece work basis will not have their income prorated over a 12 month period. The school Income-of school teachers and school administrators must be annualized.
**If the period specified on the contractual agreement is for less than
a year, the income will be prorated over the contract period. (This statement will not apply to school teachers or administrators whose annual income is paid in less than 12 months.)
Land rent received on an annual basis is also considered contractual income. See FSC 5715 since this is usually considered unearned income.
Diverted wages are wages that are legally obligated and payable to the household but diverted by the employer. Situations where diverted wages 'should be counted as income include, but are-not limited to:
Example: Mr. Smith is behind in his rent. The landlord agrees to let Mr. Smith work out his rent at $3.35 per hour by washing cars at the landlord's used car lot. The rent is $150 per month. Mr. Smith actually works 50 hours. The landlord gives him a check for $17.50 which is the difference between the rent and the amount Mr. Smith has earned.
Since this is money applied to the household expense which would otherwise be payable to the household, the caseworker will count $167.50 as earned income in the food stamp budget. $150 will be allowed as rent.
Child support being withheld by the employer is deductible as instructed in FSC 6550. The deduction may be allowed even if the child support is being diverted to pay an expense for the child's household. For example, if part of the employee's pay is withheld by the employer and used to pay his ex-wife's rent in lieu of child support, the amount withheld would be deductible.
Payment for duty in any branch of the Armed Services including the National Guard or Army Reserve will be counted as earned income.
"The'4[GREATER THAN]asic pay of some military service personnel is reduced to fund the G.I. Bill. The amount of the reduction will be excluded as income in the food stamp budget.
All housing allowances (Variable Housing Allowance, Basic Allowance for Quarters, or Basic Allowance for Housing) are counted as earned income for food stamp purposes.
Earned sick pay is defined as regular wages paid during the time an employee is absent from work due to either illness or maternity leave if:
Payments to household members by vocational and rehabilitative programs for participation in a job training program are earned income when they are not considered a reimbursement. See FSC 5411 for instructions on handling reimbursements.
See FSC 5405 for a list of payments, including certain training allowances, excluded by law.
NOTE: The earnings of individuals participating in on-the-job training programs under JTPA are counted as income unless the participating member is under 19 years of age and under the parental control of, another adult member. See FSC 5405.
Under the Family Investment Centers program, the Department of Housing and Urban Development provides families public housing and Indian housing with services such as child care, employment training and counseling, literacy training, computer skills training, and assistance in getting a GED. The value of these services will not be counted as income. However, wages and/or stipends paid under this program will be counted as earned income.
The Trade Adjustment Act (TAA) and Trade Readjustment Act (TRA) are designed to help workers who lost jobs due to the effects of imports. Benefits provided under these Acts include retroactive unemployment insurance payments, vocational training, classroom training and per diem for out-of-town interviews. Funds paid under either of these acts must be counted as unearned income.
VISTA payments made to volunteers who were not receiving TEA Cash Assistance, AFDC, or food stamp benefits at the time they joined VISTA will* be counted as earned income. See FSC 5405 for additional information.
All money paid by check or in cash to an individual for services performed as an employee will be counted as earned income. Advances of wages will be considered income in the month received if paid in anticipation of work to be performed and if the advance is to be deducted by the employer from wages paid at a later date.
When an employer provides money but this money is to be repaid directly, the money will be considered to be a loan. Loans are excluded as income. See FSC 5408.
Honey provided in advance by an employer for expenses which will be incurred during the course of the job will be considered a reimbursement. See FSC 5411.
Odd job income includes earnings mowing lawns, raking leaves, unloading trucks, sweeping sidewalks, collecting and selling cans, etc. (This will not include income of less than $30 in a three-month period that is received too infrequently or too irregularly to be reasonably anticipated.)
In most instances, income from odd jobs will be treated as self-employment income. The worker will obtain a gross monthly income figure, will exclude any expenses (e.g., gas for a lawn mower) and will allow the earned income deduction. See FSC 6200 for an explanation of the earned income deduction.
To obtain the gross monthly income from odd jobs, the county office worker will:
. Obtain an average figure using the actual income from odd jobs for at
least the last two month period; or . Anticipate the household's income from odd jobs based upon the
household's income for any previous months along with the household's
statements regarding any anticipated changes; or . Base the anticipated income upon the statements of col 1ateral
contacts; or . Use some other reasonable method of determining the monthly income.
The worker must document exactly how the household's gross monthly income from odd jobs was determined. If any expenses are excluded, these must be fully documented. This includes the type of expense, the amount excluded, and any verification obtained.
If any household member is capable of maintaining a record of the income from odd jobs, the worker will request that such records be maintained to be used as income verification. (This is not a requirement. Even if a member of the household appears capable of maintaining a record of odd job "fnco:me\ the household's application will not be denied for failure to produce such a record.) If a member routinely does odd jobs for the same person or persons, odd job income may be verified through collateral contact with these people. If no verification of odd job income can be obtained, the household will be interviewed regarding the odd job income, and the household's statements regarding this income will be accepted.
Wages paid to students under a government financed work study program. See FSC 1622.3 for instructions on handling work study income paid under Title IV of the Higher Education Act. Other types of work study income are counted as earned income. Allowable educational costs may be deducted. See FSC 1622.3.
Earned income must always be verified at initial application and when a quarterly report is submitted. Earned income will be verified at recertification and at reported change if the income is from a new source. Earned income which is unchanged or changed less than $25.00 will be verified only if information regarding the income is incomplete, inaccurate, inconsistent or outdated. See the Glossary, definition of "Verification" for additional information. Acceptable verification of earned income is listed below in order of preference.
If none of these items are available and the household has not changed employers, one of the following items may be used as verification of earned income:
-;- Employee's W-2 Form - (for monthly income divide yearly wages by
twelve). . State or Federal Income Tax Returns - (for monthly income divide
yearly wages by twelve). . The most recent information appearing on the WESD "Wage Screen - (for
monthly income divide quarterly wages by three). . State Income Tax Bureau - (most recent wages reported).
No household will be denied food stamp benefits solely because someone outside the household failed to cooperate with a request for verification. The term "outside the household" will not apply to ineligible students, ineligible aliens, or to individuals disqualified or ineligible for one of the following reasons:
This income may be verified by a statement or collateral contact with the employer or the source of the income. When an employer is unable or unwilling to cooperate in providing needed verification, the household may not be denied solely due to lack of verification. Alternative forms of verification such as tax returns or collateral statements may be used. In the absence of any type of verification, the household may furnish a written statement of the income amount.
The county office worker must document:
The name of the household member with earned income;
. The source of the earned income; and
. The verification obtained for the earned income. Pay period ending date, date paid, and gross income amount must be documented for each pay period verified.
In addition, any special verification obtained must be documented.
If the employer (or other source of income verification) cannot or will not cooperate in providing needed verification, the worker must document:
. All attempts to obtain verification; and
. The" information upon which the worker based income used in the budget.
This section describes the procedures for processing applications when a household has a member with self-employment income. These procedures also apply to households that own or operate a commercial boarding house and to household with members considered to be boarders
See FSC 4960 for instructions on handling the resources of self-employed persons.
See FSC 3280 for the work registration requirements for self-employed household members.
Self-employment is defined as receiving income directly from one's own business, trade, or profession, rather than receiving a specified salary or wage from an employer.
Examples of some self-employment income situations are shown below.
-A household member owns and manages a clothing store. The income received from the business is the household's sole source of income.
-A household member is the owner of a farm. This household member manages the farm on a routine basis.
-A household member is engaged in Tupperware or Avon sales. See FSC 5630 for additional information.
Commercial boarding houses are establishments where the proprietor offers a room and meal to individuals for the purpose of producing a profit. See for additional information.
The income from commercial boarding houses is determined by:
See for a-definition of a boarder.
Boarders are excluded from the household when the household's eligibility and benefit level is determined. Income from the boarder includes all direct payments to the household. However, shelter expenses paid directly by the boarder to someone outside of the household are not counted as income and are not deductible as a shelter cost.
Example 1 - A boarder pays, in addition to his board payment, $15.00 per month to the household as his portion of the heating bill. This payment of $15.00 is counted as income to the household.
Example 2 - A boarder pays the household's gas bill directly to the gas company. The value of this payment is not income to the household. The gas bill is not allowed as a shelter cost.
Households with boarders may exclude as income all allowable costs of doing business. The allowable cost of doing business is equal to:
-The maximum food stamp benefit amount for a household size equal to the number of boarders; or
- The actual documented costs of providing room and meals if the actual costs exceed the appropriate food stamp benefit amount. If actual costs are used, only separate and identifiable costs of providing the room and meals to boarders will be excluded as income.
NOTE: The allowable costs of doing business must not exceed the payment the household receives from the boarder.
Example 1 - Mr. Seller has two boarders in his household. They pay $200 each to Mr. Seller each month. Mr. Seller does not keep records of his expenses for providing rooms and meals to his boarders. As of 10-1-99, the maximum food stamp benefit amount for a two person household was $234. $234 will be excluded from the $400 total payment as the allowable cost of doing business.
Example 2 - Mr. Green also has two boarders in his household. They also pay $200 each on a monthly basis. Mr. Green does keep receipts for the food he purchases for his boarders. He also keeps records of his costs for utilities. His total documented costs are $255. $255 will be excluded from the $400 total payment as the allowable cost of doing business.
Net monthly self-employment income from boarders is determined by:
To be self-employed, an individual must be engaged in an enterprise for the purpose of producing income. The individual must have direct involvement in the enterprise.
Example: A person who rents his land to another individual to raise a crop is not a self-employed farmer if he is not directly involved in the growing or harvesting of the crop.
Most self-employment enterprises are sole proprietorships. A sole proprietorship is an unincorporated business that has no existence apart from the owner. The business liabilities are the liabilities of the owner.
Some self-employment situations involve a partnership. In a partnership, there should be an oral or written agreement that determines the amount of income and expenses attributed to each partner.
Self-employment income is all proceeds from the sale of goods or for services rendered by the self-employed individual plus any capital gains less the costs of producing the income. The Statement of Self-Employment (DCO-226) will be used to calculate self-employment income from operations other than farms. The Income from Farm Operations (DC0-227) will be used to calculate self-employment income from farms.
(This section of policy applies to businesses in existence for longer than one year. The policy at FSC 5662.1 applies to business in existence for less than one year.)
Normally, self-employment income is annualized. Averaging self-employment income and expenses from the past year over a 12-month period annualizes the income.
Regardless of whether the household receives the income monthly or less often then monthly, self-employment income will be annualized when the income represents a household's annual income.
Example 1 A household member is self-employed as a carpenter. He receives income from various jobs throughout the year. His income from carpentry will be annualized.
Example 2 A household member has a farm. He raises cotton and soybeans. He receives income from the sale of the cotton and soybeans in the fall of the year, but it represents his annual income. His farm income will be annualized.
Self-employment is annualized even if the household receives income from other sources.
Example A household member has a farm. He raises cotton and soybeans. The income he receives from the sale of the cotton and soybeans in the fall of the year represents his annual income. Even though his wife works full time, the farm income will be annualized.
If self-employment income is intended to support the household for only part of the year, income from the past year will not be annualized. Instead, the self-employment income from the past year will be averaged over the period of intended use and counted as anticipated income in those months.
Example Mr. G works as a bus driver for the local school. During the months of June, July and August, he raises produce and sells it at the farmer's market. The income from the sale of produce is intended to support Mr. G's family during the months of June, July and August. The income from this operation will be averaged over the months of June, July and August and shown in the food stamp budget only for those months.
Patronage Dividends- These are dividends paid by cooperatives in cash or in shares of stock. These dividends are similar to rebates paid based on the amount of goods bought or services used for the self-employment enterprise. Cash dividends are counted as income. Stock dividends are counted as a resource.
Royalties- Payments received as royalties are counted as unearned income, not as part of the self-employment income.
Rental Property- Rent payments are counted as self-employment income. Payments from rental property that is not part of the business will be handled as a separate source of self-employment income.
Agricultural Stabilization and Conservation Service (ASCS) Payments -Except for loans and payments made as a result of a Presidentially declared disaster, ASCS payments are counted as earned self-employment income. Payments made as a result of a Presidentially declared disaster are excluded as income and resources in accordance with the Disaster Relief Act of 1974 as amended.
There are numerous and constantly changing programs under the ASCS including several programs that make payments to farmers for crop losses.
Under the Payment-in-Kind (PIK) program, farmers receive commodities from the U.S. Department of Agriculture, Commodity Credit Corporation (CCC). The household receives no income until the grain is sold. If the commodities are expected to be sold during the year, the anticipated income must be included as self-employment income. The CCC may also pay farmers in the form of commodity certificates for land diversion or acreage reduction. The certificates may later be surrendered to the CCC for cash or for commodities, or the farmer may sell the certificates to someone else, usually for a profit.
The certificates are valued in dollars. When the certificates are used, the farmer receives cash or commodities based on the price of the commodity at the time the certificate is used. Cash received under this program is counted as income in the year it is expected to be received. PIK payments counted as income are annualized. The value of commodities the farmer intends to use as feed or seed is excluded as income. If the farmer intends to hold the certificate or commodities for longer than one year, the value of the commodities is counted as a resource.
A farmer may sell commodities they own to CCC and receive them back from CCC as PIK commodities. The CCC pays farmers for the commodities with the payment being used to repay price support loans previously extended to the farmer by CCC. These sale and loan payments should be treated as separate transactions from the receipt of CCC certificates or PIK commodities and should be handled as any other sale of commodities and repayment of a price support loan.
Federal Crop Insurance Corporation (FCIC) Payments- The farmer must pay a premium to be covered by the FCIC. Payments from the FCIC are excluded as a non-recurring lump sum payment.*
Crop Insurance Payments/Private Company Payment- Crop insurance payoffs from private companies are excluded as income if received in a lump sum payment. Payoffs received in installments are counted as income.
Verification of income from a corporation may be obtained from the corporation's books or tax records. If the value of stock in a corporation, is not readily available, the value may be determined by subtracting corporate liabilities from assets and prorating the difference among.the shareholders based on the percentage of shares held.
The term "capital gains" as used by the IRS describes the handling of profits from the sale or transfer of capital assets used in a self-employment operation. For IRS purposes, such proceeds less depreciation are considered taxable income. In the Food Stamp Program, depreciation is not allowed; so, for the purpose of determining food stamp eligibility, a capital gain is the sale price less encumbrances, interest, penalties, etc.
Net capital gains are counted as part of the household's self-employment income before the costs of producing the income are excluded.
Example -_ A farmer purchased a used combine for $6,000 in 1987. He depreciated the combine over a period of ten years in the amount of $6,000. In 1998, he sold the combine for $2,000. He owed nothing on the combine. For Federal tax purposes, he had no capital gain on the combine. For food stamp purposes, he had a capital gain of $2,000.
A farmer may receive any of the following payments or credits if he or she applies for the payment and is eligible to receive the credit or payment:
Federal Gasoline Tax Credit- This is a credit against tax liability. It is excluded as income.
State Gasoline Tax Refund- This is a non-recurring lump sum payment. It is excluded as income.
NOTE: The Federal gasoline tax credit and the State gasoline tax refund may be combined on the same line of the tax form.
Recaptured Depreciation and Recaptured Investment Credit- IRS allows self-employed individuals to deduct depreciation on property as a cost of doing business. When the property is sold before the end of its useful life, the seller must declare a portion of the depreciation as income for IRS purposes. This is commonly referred to as recaptured depreciation.
IRS allows a percentage of certain investments to be deducted as an expense. If the asset is disposed of or ceases to be eligible before the end of the recapture period for recovery property or before the end of the estimated life used to figure the credit, a percentage of the credit may have to be recaptured for IRS purposes. This is commonly referred to as recaptured investment credit.
Recaptured depreciation and recaptured investment credit are considered to be capital gains.
** 5632 Contractors
Some contractors are considered to be self-employed while others are not. The status of a contractor must be decided on a case by case basis.
A; self-employed contractor usually operates a separate, more specialized business than the proprietor of the main business and must pay his or her own expenses. He or she may not have an established work schedule and specified wages. Usually, the employer will not withhold social security and income tax from a self-employed contractor's earnings.
Example: A sharecropper who pays the costs of doing business and receives a portion of the net income in exchange for his labor is a self-employed farmer. A sharecropper who does not pay the costs of doing business is not a self-employed
farmer.
** 5633 Corporations
Corporations are separate legal entities responsible for its debts and obligations. Shareholders who receive only dividends are entitled to neither the costs of producing self-employment income nor the earned income deduction. The dividends will be counted as income in the month received or prorated over the period of time the payment is intended to cover.
If a household has shares in an S Corporation, the S Corporation income reported on the household's form 1040 must be counted as income. Income from an S Corporation will be annualized, that is averaged over a 12-month period, and the earned income deduction will be allowed.
If an individual owns a corporation other than an S Corporation and receives a salary from that corporation, he or she is considered to be an employee of that corporation. The salary will be handled as earned income in the food stamp budget.
The resource of a corporation including bank accounts, belong to the corporation regardless of whether or not they are income producing. Resources owned by a corporation will be excluded when determining food stamp eligibility.
If an individual owns stock in a corporation, the stock is counted as a resource unless the stock is essential to the individual's employment and the employee works at least 30 hours per week in the business or earns 30 hours per week X the federal minimum wage. If the employee of a corporation must hold stock in the corporation as a condition of employment, the stock will be considered essential to employment.
Example: A farmer has incorporated his farm. All of the corporation's assets are related to the farm. The farmer is the corporation's sole employee. He works at least 40 hours each week on the farm. The corporation's stock is excluded as a resource.
No income from a self-employment business will be counted until the
household has actually received income from the business. Once the
-operation has been in existence long enough to make a projection of future
income, the income received to date will be used to project future income.
To project future income, the county office worker will average the self-employment income and expenses over the period of time the business has been in existence.
Example A household submits an initial application for food stamps. For the last eight months the case head and his wife have operated a detail shop. The couple provides their income tax return to verify their self-employment income. The self-employment income on the tax return covers the period from July 1 through December 31. The operation's income and expenses must be divided by six to anticipate the couple's income from the detail shop.
When self-employment income cannot be projected, the following procedures will be used:
For households subject to quarterly reporting (QR), verification of the business1 income and expenses for the three-month period just prior to the report month must be submitted with the QR form. This information will be used to anticipate the household's self-employment income for the upcoming quarter.
For households not subject to QR, a three-month certification period will be assigned. At each recertification, the household must provide verification of the business' income and expenses for the three-month period just prior to the month of recertification. This information will be used to anticipate the household's self-employment income for the upcoming certification period.
Some households have an operation such as a farming operation that shows income only at the end of the year. For example, a farmer raises cotton and soybeans. This household will not have anv income to show from the self-employment operation until the crops are sold and the expenses paid.
If the household anticipates changes in the self-employment enterprise, these changes must be considered when the self-employment income is anticipated.
Example A household member raises chickens for a poultry processor. At recertification, he reports that one of his three chicken houses was destroyed in a storm. Since his oldest son has joined the service and left the home, he does not plan to rebuild the chicken house. His anticipated income must be adjusted to ref1ect his anticipated change in income and expenses.
If the county office worker will not change the self-employment income as a reslut the reported increase or decrease is due to a seasonal fluctuation in income.
Example Mr. F has self-employment income from a roofing company. He applies for food stamp benefits in January. He reports no income from the roofing company due to bad weather. This is considered a seasonal fluctuation in income. The income from the roofing company will be anticipated based on last year's income.
If the increase or decrease is not due to a seasonal fluctuation, the county office worker must anticipate the effect of the change on the household's self-employment income. Examples of such changes include, but are not limited to, a change in the type of business, a change in the size of the business, or a substantial change in the amount received for the product.
Example Mr. K is self-employed as a bricklayer. He applies for food stamp benefits in March. He reports that he hasn't been able to work since January when he had a heart attack. He has gone back to work, but he will not be able to work as many hours or to accept as many jobs. The worker must anticipate his self-employment income based on his current situation.
When self-employment income is anticipated, any capital gains that the household anticipates receiving during the 12-month period must be divided by 12 and the average monthly amount added to the monthly self-employment income. The average capital gain amount must be counted in each of the 12 months during which the income is anticipated to be received. However, if the anticipated amount of capital gains changes, a new average must be calculated.
Costs of producing self-employment income are excluded from the-gross income. Allowable costs include, but are not limited to, the identifiable costs of:
Labor such as wages and salaries paid to employees. (Wages paid to
the business owner or other household members are NOT allowable
costs.)
Stock.
Raw material and supplies.
Seed and plants.
Fertilizer and lime.
The interest (but np_t the principal) portion of payments on business
or operating loans or payments on income producing real estate and
capital assets like equipment, machinery or other durable goods.
Insurance premiums paid on buildings, equipment or other income
producing property.
Taxes paid on income producing property.
Privilege taxes such as excise taxes that must be paid in order to earn self-employment income. Licensing fees.
Business transportation costs.
Rental payments on income producing property. If a business owner - :is renting equipment with an option to buy, the rent payments are allowable until the purchase is made. Utilities paid on business property. Costs for the repair and maintenance of equipment. Storage and warehousing costs.
Special equipment or clothing specifically needed to perform the job. (Blue jeans and work boots would not be considered special equipment since they are not specific to a particular job. Hip boots used by a fisherman would be considered special equipment. Welder's shields or special gloves used by welders would be considered special equipment. Uniforms purchased to wear in a house cleaning operation would be considered special clothing.) The cost of rooms and meals for any self-employed individual whose job takes him or her away from home and requires them to remain at the job site overnight.
The following items WILL NOT be considered costs of producing self-employment income:
Payments on the principal (but not the interest) portion of payments on business or operating loans or payments on income producing real estate and capital assets like equipment, machinery or other durable goods.
Expenses and net losses from previous years.
Federal, state and local income taxes.
Money set-aside for retirement.
Work related personal expenses such as transportation to and from work.
Depreciation.
Penalties and fines.
Charitable contributions.
If the household's home is on property connected to the property used for the self-employment enterprise, the county office worker must determine if the household's shelter costs can be separated from the costs of doing business. If necessary, proration may be used to determine the amount of the payment on the property attributed to shelter costs. This calculation may be based on information from a mortgage lender, real estate tax records, Farmers Home Administration (FHA) documents, insurance premiums, etc.
Example A household submits a loan agreement for the purchase of a diary farm and house. The monthly payment is $1,500. The portion of the payment attributed to the diary farm is $1,000.* The portion of the payment attributed to the house is $500 or 3356 of the total payment. The remainder of the payment will be excluded as a cost of producing the self-employment income.
This percentage may be applied to taxes and insurance costs if no better information is available.
If the costs of rent or mortgage (or interest on the mortgage), insurance, taxes and interest cannot be separated, these costs will neither be allowed as a shelter cost nor as a cost of producing the self-employment income.
If a household uses part of the residence such as a room or a separate apartment solely for the self-employment operation, the county office worker will, at the household's discretion either:
Include all of rent or mortgage, taxes and insurance as shelter costs;
OR
Exclude part of the rent or mortgage interest, taxes and insurance as a cost of producing the self-employment income. (Payments on the principal balance of a loan are not deductible as a cost of producing self-employment income.) The portion of the shelter to be excluded as costs -on producing self-employment income may be based on the percentage of the total living space and solely for the self-employment enterprise. Any portion of a rent payment or mortgage, taxes or insurance payment used as a cost of producing self-employment income may be used as a shelter cost.
Example A member of a household is self-employed as a beautician. The household is renting a home for $600 each month. The den has been converted into a beauty shop. The home has 1200 square feet. The square footage of the den (200 square feet) is about 16.6% of the square footage of the entire house. The portion of the rent payment that may be used as a cost of producing self-employment income is $99.60. The remainder of the rent payment, $501.40 may be allowed as a shelter cost.
If a self-emploved individual's house is on property connected to the property used for the business, the county office worker must determine if the self-employment costs can be separately identified from the household's shelter costs.
If the utilities for the business are measured and billed, separately, the utility costs for the business will be allowed as a cost of producing the self-employment income. The utilities for the residence will be allowed as a shelter cost. If the household is otherwise entitled to use the utility standard, the household may elect to do so.
If the utility costs for the business cannot be separately identified from the utility costs for the residence, the utility costs may not be allowed as a cost of producing the self-employment income. The household will not be allowed to use actual utility costs in the food stamp budget. However, if the household is otherwise entitled to use the utility standard, the utility standard will be used in the food stamp budget.
If part of a self-employed individual's residence is used for the business, the county office worker must determine if the self-employment costs can be separately identified from the household's shelter costs.
... If the utilities for the business are measured and billed ":'; " 'separately, the utility costs for the business will be allowed as a cost of producing the self-employment income. The utilities for the remainder of the residence will be allowed as a shelter cost. If the household is otherwise entitled to use the utility standard, the household may elect to do so.
If the utilities are not measured and billed separately, the household may:
To calculate net self-employment income using a form DCO-226 or DCO-227:
Total the gross receipts from the business during the selected
period.
Exclude the cost of producing the income.
If the selected period is one year, annualize the net income by
dividing the net income by 12. If the selected period is less than
one year, average the net income by dividing the net income by the
number of months in the selected period.
If there is a profit, the net self-employment income will be used to determine the household's gross food stamp income. Losses will not be deductible in the food stamp budget unless the self-employment enterprise is a farming operation. See FSC 5670 for a definition of a farming enterprise and an explanation of deducting losses.
When self-employment is derived from two or more separate enterprises with no farm operation involved, the gross income and allowable costs fromeach business will be combined to calculate the net self-employment income.
When one of the enterprises is a farm, the county office worker must complete the following steps:
If,there is no loss in the farm operation, the farm income and allowable costs will be combined with the income and allowable costs of the other business. If there is a loss, the income and allowable costs of the farm operation will not be combined with the income and costs from the other business. Instead the loss will be deducted as instructed in FSC 5670.
When a household member is involved in sa self-employment operation with one or more partners, the household's share of the income from the business will be calculated by:
A farming operation is a business enterprise engaged in the production of agricultural products. Farming operations may involve cotton, soy beans, rice, other grains, stock, dairy, poultry, fish, fruit, beeswax, vegetables, ranching, tree farms, and nurseries among others.
Losses incurred in farming operations are deductible from any other household income if:
The farmer's cost of producing the farm income exceeded the gross income from the farming operation; and
The farmer received or expects to receive annual gross proceeds of $1,000 or more from the farming operation.
Only allowable costs of producing self-employment income will be excluded to determine if a loss was incurred by a farm operation.
When a farm operation shows a loss, the county office worker will:
Households currently participating in the Food Stamp Program may report changes in self-employment income. The worker must determine if these changes will be reflected in the anticipated income. Self-employment income will not be recalculated to reflect seasonal fluctuations in income.
Example Mrs. M. has a landscape business. On her quarterly report submitted in April, she reports she was not able to work much in March due to bad weather. This is a seasonal fluctuation in income, and the self-employment income will not adjusted.
Other types of reported changes must be reflected in the self-employment income.
;Example Mr. J owned 500 acres of land. He raised cattle* wheat, and
fresh produce on this land. In July he reports to the worker **-: -"r that he filed for bankruptcy. The bank repossessed his land, and his cattle were sold to pay off his debts. He has moved to town and gone to work at a factory. The worker must remove the self-employment income from the food stamp budget and add Mr. J.'s earnings to the budget.
Generally, self-employment income may be verified by viewing the household's federal income tax return for the previous year. The household's income tax return may be used as verification if the return reflects a full year's income or the income can be divided over the months the business has been in existence. The "Schedule C" attached to the return should contain a complete statement of the household's self-employment income and expenses. (Not all expenses listed will be excludable under food stamp policy.) If a tax return is not available, ledgers, bank books or other accounting records maintained by the household or prepared by a bookkeeper or accountant may be used. Receipts for the sale of goods and services and receipts for allowable costs of producing the income may also be accepted.
If the household states there are no records, the DC0-226 or DCO-227 will be completed based upon the household's declared income and expenses. This method may be used temporarily. The household must be instructed to furnish records of income and receipts to verify costs at the next scheduled recertification. Required documentation includes:
A 12-month certification period is assigned to self-employed households when all the following conditions are present:
The household's self-employment income represents their annual support;
The household has no other source of income;
The income has been prorated or averaged over a 12 month period;
The income can be readily predicted; and
The household's circumstances are not likely to change.
A 12 month certification period will not be assigned unless all these conditions are met or the household is subject to quarterly reporting as specified in FSC 11510.
When a household receives self-employment income in a short period of time each year, the household must be recertified when the income is expected to be received or when the income tax return is normally filed. Usually, this will be during the months February, March or April. The certification period can be adjusted so the household can be seen in one of those months. If the household is subject to quarterly reporting, the certification may be shortened to end in an appropriate month.
Unearned income is income received by a household which has not been earned through employment or self-employment. Households in receipt of only .unearned income will not receive the earned income deduction.
Common sources of unearned income are listed below in alphabetical order:
Allotments | Rental Income |
Child Support/Alimony Payments | Severance Pay Received in Installments |
Contributions | Sick Pay |
Diverted Payments | Social Security Benefits (SSA) |
Educational Benefits | Strike Benefits |
Foster Care Payments | Supplemental Security Income (SSI) |
Installment Contracts | Unemployment Insurance Benefits (UI) |
Interest, Dividends, Royalties | Utility Assistance from HUD or Housing Authority |
Pensions | Veteran's Assistance (VA) |
Reimbursements for Normal Living Expenses | Workman's Compensation |
TEA (Transitional Employment Assistance) Program cash assistance payments are counted as unearned income. TEA cash assistance is paid on a monthly basis and is based on a standard of need for a particular household size.
Food stamp benefits will not be increased when a household member's TEA benefits are reduced, suspended or terminated due to non-compliance with the program requirements, or for non-cooperation with the Office of Child Support Enforcement or for an intentional program violation. See FSC 12110 for instructions.
Diversion Assistance is a one-time payment to or on behalf of the family that will resolve a financial problem so that they adult can maintain and/or obtain employment. Diversion Assistance is available to an adult only once during his or her lifetime.
In the Food Stamp Program. Diversion Assistance payments will be excluded as a nonrecurring lump sum payment. See FSC 4950 for instructions on handling lump sum payments.
An Employment Bonus cash payment will be made to any family who becomes ineligible for TEA cash assistance due to employment or who requests the TEA case be closed due to employment, unless the family has already received an Employment Bonus within the preceding twelve months. The amount of the bonus payment will be equal to the amount of the last regular TEA cash payment.
In both the regular Food Stamp Program and the Simplified Food Stamp Program. Employment Bonuses payments will be counted as unearned income in the food stamp budget in the month received.
When a TEA case closes due to employment, the family is automatically eligible to receive two months of Extended Support Transportation payments in the amount of $200 each month. These payments are intended to help the family meet transportation costs in the first two months fol1owing termination of TEA cash assistance.
In both the regular Food Stamp Program and the Simplified Food Stamp Program. Extended Support Transportation benefit payments will be excluded as a reimbursement for a .iob-related expense to the extent that these payments do not exceed actual .iob-related expenses for transportation costs.
Example A household member receives an Extended Support Transportation payment in the amount of $200. The member's transportation expenses total $150. $50 will be shown as unearned income in the food stamp budget.
Transportation costs may include the expenses of purchasing, repairing or maintaining a car. Transportation costs may also include payments made for public or private transportation to the employment site. Transportation costs will be verified to the extent that it is practical to do so. For example, a household may be able to verify the costs of repairing a car or purchasing tires. However, they may not be able to furnish receipts for gas. In the case, the county office worker may use the current State reimbursement rate of $.28 per mile times the round trip mileage to the work site to determine the cost of transportation to work.
Allotments are monthly payments received by a dependent of a member of the armed forces (e.g. Army, Air Force, Marines). Allotments are deducted from the military pay and sent directly to the dependent on a monthly basis. Allotments are counted as unearned income.
Annuities are counted as unearned income. Lottery winnings received on a one-time basis are considered a resource in the month received. Lottery winnings paid over several years are counted as unearned income.
Annuities and lottery winnings paid annually will be averaged over a 12-month period of time. Annuities and lottery winnings received less often . than annually may either be counted in the month received or averaged over the certification period.
Alimony payments made directly to the household from someone outside the household are counted as unearned income.
Child support payments made directly to a household member from someone outside the household are counted as unearned income. This includes payments made voluntarily by the absent parent, as well as payments ordered by a court. When child support payments are directed through a court, the entire gross amount collected is counted as unearned income. Collection fees, postage expenses or other fees charged by the court are neither deducted nor excluded from the child support payment.
When child support is received sporadically by individuals not receiving TEA, the worker must try to establish some pattern of payment. If a pattern of payment can be established, the payment will be averaged forward over the period of intended use. For example, if a $100 child support payment is received every other month, $50 per month will be counted as income.
When the payments are so sporadic that receipt cannot be reasonably anticipated, no child support will be included in the food stamp budget. Households receiving sporadic child support payments must be carefully instructed to report the receipt of child support payments in a timely manner. If the worker can later establish a pattern of payment, the child support income will be added to the food stamp budget.
Child support received as the result of the interception of a state or federal income tax refund is a lump sum payment. Lump sum payments are excluded as income. See FSC 4950 for instructions.
Legally obligated child support payments from a household member to someone who is not a household member are deductible. See FSC 6550 for instructions.
Under Title IV-D, the state is assigned the rights to all child support payments received by the recipients of TEA Cash Assistance. Through the Office of Child Support Enforcement (OCSE), the state seeks child support payments on the behalf of TEA Cash Assistance recipients.
OCSE refunds to the TEA recipient any child support remaining after deduction of the TEA payment are automatically calculated into the client's food stamp budget as long as the client receives TEA Cash Assistance.
If the total child support collected, alone or with other countable income, exceeds the TEA income eligibility standard of $223, the TEA case will close. If the TEA case closes, the gross child support payment will be counted as income in the food stamp budget.
Child support received directly from the absent parent on behalf of Medicaid recipients may be sent by the household to OCSE. OCSE later returns the child support payments to the household. These payments will not be counted as income until they are returned to the household by OCSE.
OCSE provides services to individuals who are not receiving TEA benefits. Child support payments collected for children not included in a TEA case are considered unearned income. OCSE charges households not receiving benefits a collection fee; however, this fee can be neither deducted nor excluded. The entire gross amount col 1ected and di sbursed to the household will be counted i n the food stamp budget. Exception: Non-recurring lump sum payments issued to make up for 1) a missed payment already counted in the food stamp budget or 2) payments held in error by OCSE will be handled as a lump sum payment in the month of receipt. See FSC 4950.
EXAMPLE - A household normally receives $100 per month child support through OCSE. This amount has been included in the food stamp budget for the certification period June through November. On December 15, the household submits another food stamp application. Child Support of $300 is declared on the application. At the interview, the household states that the $300 child support payment was received on December 10th. However, $200 of that amount was"to make up for the months of October and November when no payments were received. Since $200 of the $300 payment has already been counted in the food stamp budget, only $100 will be shown as income in the budget for December. $100 will be anticipated as child support income in the prospective budget.
At times, OCSE withholds support received by individuals no longer receiving TEA in order to reimburse previous TEA or AFDC payments. Such individuals are considered to have an "AFDC or TEA arrearage." Any child support monies, whether intended for the current month or a month prior to the current month, will be excluded as income when applied to an AFDC or TEA arrearage. See FSC 5401.
At "other times, an absent parent pays child support in excess of the court-ordered amount to make up for previously missed payments. If these payments need not be applied to an AFDC or TEA arrearage, OCSE will send the extra money to the household. Any such payments not already been counted in the household's food stamp budget, will be counted as income in the month received. When it is anticipated that the absent parent will continue to make support payments in excess of the court-ordered amount due to the number of missed payments, the extra money will continue to be counted in the food stamp budget. A variable budget will be prepared as instructed in FSC 7523.3 if the household's child support payments are anticipated to decrease.
When OCSE receives more than the court-ordered amount of child support and there is no arrearage, only the court-ordered amount will be disbursed. The balance of the money will be held by OCSE in an "advance account" and used to pay the court-ordered support amount when the absent parent is unable to pay due to lack of work or other circumstances. Only the amount actually disbursed to the household by OCSE plus the collection fee will be counted in the food stamp budget.
In the 7000 Section of the Food Stamp Certification (FSC) Manual a variety of methods of anticipation income are explained. The worker may chose from FSC 7000 the most appropriate method of anticipating child support income based on the household's current situation.
Example 1: A household receives child support payments in the same amount each week or every other week. You may anticipate monthly income by multiplying the payment amount by 4.334 or 2.167 as appropriate. See FSC 7513.
Example t\ A household normally receives child support every month but the monthly amount fluctuates. You may average several months' income. See FSC 7521.
Example 3: A household receives child support payments sporadically (every other month or every quarter) but a pattern of payment can be established. You may average the child support payment over the period of intended use. See FSC 7520.
If the household is expecting changes in the amount of child support or the frequency of payment, these changes must be anticipated when the prospective budget is prepared. See FSC 7512 for instructions. In the event that a change is anticipated, a variable budget may be required. See FSC 7523.3 for instructions on preparing variable budgets.
The county office worker must be alert not to verify and handle child support payments from different sources as one source of income.
Example: There are two children in the home. Each child has a different father. Each father pays child support. Each child support payment must be handled as a separate source of income.
In some instances, child support received by the household will not be included in the budget.
General guidelines for excluding child support income:
DO NOT COUNT child support received by the TEA recipients which are obligated to be turned over to OCSE to maintain TEA eligibility even when, such payments are kept by the household in violation of the law. (FSC* 5401.)
DO NOT COUNT payments received by former AFDC and/or TEA recipients when the payments are held by OCSE and applied to AFDC and/or TEA arrearages. (FSC 5401.)
NOTE: Any of these payments not to be applied by OCSE to an AFDC/TEA arrearage will be sent to the custodial parent. Unless these funds have already been counted as income in the food stamp budget, they must be counted as income in the month of receipt. (FSC 5704.3.)
DO: NOT COUNT non-recurring lump sum child support payments received through an interception of a state or federal income tax refund or a lump sum Worker's Compensation payment. (FSC 5401.)
DO NOT COUNT non-recurring lump sum child support payments issued by OCSE to make up for a payment missed in error by OCSE and already counted in the food stamp budget. (FSC 5704.3.)
DO NOT COUNT the value of voluntary in-kind payments intended as child support. For example, if the absent parent furnishes food, milk, pampers, clothes, etc. in the absence of a cash payment to the custodial parent, you would ML count the value of the items as income. (FSC 5406.)
General guidelines for counting child support income:
DO COUNT-monies diverted from the court-ordered support or alimony payments to a third party for a household expense SO LONG AS there is no court order or other legally binding document requiring direct payment to a third party. If such an agreement exists, the monies will be excluded as income. Any part of a household expense covered by excluded income is not allowed in the food stamp budget. (FSC 5704 & 6700.)
DO COUNT the gross amount of the child support payment. Collection fees charged by OCSE are neither deductible nor excludable. (FSC 5704.3.)
DO COUNT IN THE MONTH OF RECEIPT money held by OCSE in an "advance account" and used to pay the court-ordered amount when the absent parent is unable to work. (FSC 5704.3.)
Child support received through the Office of Child Support Enforcement (OCSE) will be verified through the Arkansas Child Support Tracking System (ACTS). Each DHS county office has A Guide To The Arkansas Child Support Tracking System. For a full explanation of the system, the county office worker must refer to the guide.
To access the ACTS system:
To investigate the possibility of unreported child support, use the ACTS system Social Security Number Inquiry Screen (SSNX). To inquiry via SSNX:
If there is a child support case, the custodial parent's member ID will appear. This number will be used to verify the current status of child support payments. To verify the current status of child support payments, access the ACTS system CKHS screen.
When running multiple custodial parents' member IDs on CKHS, delete the last check date on the screen before the next member ID is keyed. Otherwise, incorrect history will appear on the screen.
CKHS shows the actual check sent to the custodial parent. Both the amount and the check date appear, but it does not show which case the money came from. Also displayed is the Offset Amt., the amount withheld for cost or overpayment. The Offset Type (OFST TYPE) field codes are:
C - Basic cost, indicates the OCSE collection fee.
0 - OCSE is withholding an overpayment
M - Both Cost and Overpayment are being withheld.
If only a code C appears, this indicates the OCSE collection fee. The collection fee must be added back to the check amount to calculate the child support payment. If a code 0 appears, OCSE is withholding an overpayment from the check. The net amount received will be counted as income unless the conditions in FSC 5410 are met. If a code M appears, the worker must go to the POFF screen to identify the types and amounts of the transactions. If a payment appears to be a one-time lump sum payment, the worker must call OCSE for confirmation and other necessary information such as the period during which the arrearage occurred.
The Disbursement Action field shows whether the check has been cashed. CAUTION: When CKHS has multiple pages, the data appearing on the bottom line of each page is duplicated on the too line of the succeeding page.
To access the POFF screen via the ACTS system:
The F7 and F8 fields may be used to scroll up or down to locate the transaction date needed. The amounts listed on the CKHS screen should coincide with the amounts listed for that transaction date on the POFF screen. CAUTION: When CKHS has multiple pages, the data appearing on the bottom line of each page is duplicated on the top line of the succeeding page-. ' Under the Case ID field, the case number of all absent parents who are paying child support to this custodial parent appears. The screen also provides a breakdown of the offset types listed on CKHS.
To determine the number of absent parents making payments to a custodial parent, the worker will use the ACTS System MCAS screen. To access the MCAS screen:
The messages "Top of Data" and "Bottom of Data" indicates all child support cases associated with this custodial parent.
When only a code C appears, the amount withheld is for the OCSE collection fee. The worker must add the collection fee back to check amount to calculate the child support payment. If a code 0 appears, OCSE is withholding an overpayment from the check. The net amount received must be counted unless the conditions in FSC 5410 are met. If a code M appears, the worker must go to POFF to identify the types and amounts of the transactions. If a payment appears to be a one-time lump sum payment, the worker must call OCSE for confirmation and other necessary information such as the period during which the arrearage occurred.
To verify child support not paid through OCSE, the count office worker may accept:
Check stubs or other documentation from a court or other agency
that collects and disburses the child support payment.
A signed, dated statement from the individual who pays the child
support. If possible, the statement should contain the
individual's name, address and telephone number.
Other documentary evidence of the amount of the payment.
If the absent parent refuses to verify the child support payments and other documentary evidence is not available, the worker may accept collateral statements. In the event that collateral statements are not available, the worker may accept the household's statements about the amount of the payment.
Any discrepancies between information reported by the household and the information verified by the worker must be resolved. For example, a household has not reported child support income, but the worker has information indicating child support is being received. The household will be allowed to provide additional information if necessary to prove its statements.
Each source of child support income should be clearly documented to show:
* The name of the individual who makes the child support payment;
* The name of the child for which the child support is received;
* The date and amount of each child support payment used in the calculation of the monthly income;
* The frequency of receipt of child support (e.g., weekly, bi-weekly, monthly, etc.); and
* An explanation of how the gross monthly child support income was calculated.
Contributions are recurring payments received by a household member from a friend, relative or organization. Loans, gifts, lump sum payments, and irregular or infrequent income will not be considered contributions.
Cash donations, based on need, that are received from one or more private, non-profit charitable organization are excluded as income to the extent that such donations do not exceed $300 in a Federal fiscal year quarter. (See FSC 5405, number 10.) The Federal fiscal year quarters are listed below.
First Quarter- October, November, December
Second Quarter- January, February, March
Third Quarter- April, May, June
Fourth Quarter- July, August, September
Those donations that exceed $300 in any Federal fiscal year quarter will be considered unearned income.
Example - A household received $100 donations in July from a church. In August, the same church gave the household another $100 donation. In September the ministerial alliance gave the household $250. The donations received in July and August woul d be excl uded as i ncome. $100 of the September donation would al so be excluded. For September, the household would have $150 in countable unearned income from charitable donations.
Contributions will be considered income in the month received when received on a monthly basis. When received less often than monthly, contributions will be averaged forward over the period of intended use.
Monies legally obligated and payable to the household will be counted as income when diverted by the payor to a third party for a household expense.
Examples:
Some states have a General Assistance (GA) Program. (Arkansas does not have a GA Program.) In those states, some GA vendor payments are provided for living expenses. Only those GA vendor payments provided to cover housing expenses, exclusive of energy or assistance expenses, will be included as income. GA vendor payments provided for the purpose of energy assistance will be excluded as income. (Also see FSC 5405, item 4.)
For information about determining the amount of educational benefits to be counted as income, see FSC 1622.3.
This policy applies only to those households into which foster care placements have been made by a Federal, State or local governmental foster care program - e.g.. Division of Children and Family Services or Mental Health Services (Children "taken in" by neighbors, friends or relatives without any type of formal placement are not considered foster children for the purpose of applying this policy. They will be included as household members if otherwise eligible.) Households that provide foster care will have two options.
Option 1 - The household may elect to consider the person in foster care as a boarder. If the person in care is considered to be a boarder, the foster care payment will be excluded as income to the household.
Option 2 - The household may elect to include the person infoster care
as a household member. If the person in care isincluded as
a household member, the foster care payment willbe included as income to the household.
Guardianship payments are payments made to a person who becomes a child's legal guardian. There are two types of guardianship payments - Kinship Care and subsidized guardianship. Guardianship payments are treated the same as foster care payments with the same two options.
A monetary gift or prize on a one-time basis will not be considered income to the household. A monetary gift received for a birthday present or a Christmas present is an example of a one-time gift.
Gifts received on a one-time basis will be considered a lump sum payment and handled as instructed in FSC 4950.
If a household member receives a recurring gift or prize that exceeds $30 per quarter, the gift or prize will be counted in the household's budget as unearned income. Recurring gifts or prizes in excess of $30 per calendar quarter may either be averaged forward over the period of intended use or counted as income in the month received.
Income resulting from an owner-financed sale of property is counted as unearned income; no earned income deduction will be allowed. However, the installment contract will be handled in the same way as self-employment income is handled.
The following items will be allowed as costs of doing business.
Example 1 - Mr. Green owns 20 acres of land which he purchased in 1990. His payments on the land are $150 per month which includes $60 per month interest and a $30 escrow payment. The escrow account is used to pay real estate taxes of $200 and annual insurance payments of $100.
In 1996, Mr. Green sold this land to Mr. Redd. Mr. Redd paid Mr. Green $1,000 down and agreed to pay $175 per month for 240 months. Mr. Green will continue to pay the bank $150 per month on the original mortgage. Since the taxes and insurance are included in this payment, Mr. Green will continue to incur these costs until the original mortgage is paid. Mr. Redd agreed to pay all brokerage fees.
The $1,000 down payment will be excluded as income since it is considered a lump sum payment. The full $175 payment (less exclusions for the allowable costs of doing business) will be counted as unearned income. The allowable costs of doing business are the costs of taxes and insurance incurred by Mr. Green and the interest Mr. Green pays on the original mortgage.
Taxes | $200 |
Insurance | $100 |
$300 |
Yearly Costs - 12 months = $25 per month
Monthly Interest Payments Made by Mr. Green | $60 per month |
Monthly Costs of Taxes and Insurance | 25 per month |
Total Excludable Costs Per Month | $85 |
Monthly Payments Received by Mr. Green | $175 |
Total Monthly Costs of Doing Business | - 85 |
Portion of Payment to be Counted in Budget | $ 90 |
Example 2 - Mr Long also sold 20 acres of land to Mr. Redd. He will also receive $1,000 down and $175 per month for 240 months.
There are no mortgages on the property Mr. Long sold. Mr. Redd pays all taxes and insurance costs on the property and paid all brokerage fees at the time of the sale.
The entire $175 monthly payment will be counted as income in Mr. Long's food stamp budget.
The following are examples of interest, dividend, or royalty payments that are considered unearned income:
Interest payments received by any household member for money held in any type of account - checking, savings, certificate of deposit, etc. Interest is considered unearned income even if not paid directly to the household but added to the account balance.-
An interest payment will be counted as unearned income in the month received, or prorated over the period of time the payment is intended to cover, whether received on a quarterly or annual basis. The household selects the method to be used.
Example: On 11/10 a household member received a quarterly interest payment in the amount of $15,00 from his savings account. He may choose to either consider the entire $15.00 as income for the month of November, or may have it prorated over the three-month period of November, December, and January.
Dividends are payments received from investment such as, but not limited to, stocks, bonds, insurance, etc. owned by the household. Dividends may be received on a monthly, quarterly or annual basis. Dividends are counted as unearned income either in the month received or are prorated over the period of time the payment was intended to cover.
Royalties are:
Royalties may be issued on a monthly, quarterly, or annual basis. Royalties will either be counted as income in the month of receipt or prorated over the period of time the payment is intended to cover.
A pension is a fixed sum paid regularly under certain conditions to an individual or to that individual's surviving dependent following years of military service or employment.
The following households contain members who may receive pensions:
When a portion of a pension is awarded to an ex-spouse by the court in a divorce or legal separation settlement, the portion diverted to the ex-spouse is excluded as income as long as the payment goes directly to the ex-spouse.
Example - Mr. G. is in receipt of civil service retirement benefits. The court awarded 49 percent of his retirement to his ex-wife. Mr. G. receives only the 51 percent that the court allocated to him. He receives an annual statement that indicates his total benefit and the wife's portion of the total amount. Only the portion of the retirement benefits Mr. G. actually receives will be counted in his food stamp budget.
Railroad Retirement benefits are paid to individuals and spouses covered under the Railroad Retirement Act. An individual may receive both Railroad Retirement and Social Security, if covered under both programs. The spouse of a Railroad Retirement beneficiary may receive a spouse's pension while receiving Social Security under his or her own record. Railroad Retirement benefits are counted as unearned income.
See the Unearned Income Appendix for additional information.
If a household is reimbursed for normal household expenses such as rent, mortgage, personal items or food that is eaten at home, the reimbursement Is-considered to be a gain or benefit and is counted as unearned income. (For situations which reimbursements are excluded, see FSC 5411.)
If the reimbursement is provided by an employer and considered compensation for actual work performance, the income will be counted as earned income.
NOTE: This section does not deal with income from boarders. See FSC 5620 for instructions on handling income from boarders.
Rental income is money received as the result of the rent or lease of property owned by a household member or members. The amount of the rental income to be shown in the food stamp budget will be the gross amount of rental income received less the "costs of doing business". Costs of doing business include real estate taxes on the property, insurance premiums paid for insurance to cover the property, and interest paid on a loan on the rental property.
If the costs of doing business cannot be distinguished from a household's shelter costs, then these costs will not be allowed. For-example, a household owns a house with a garage apartment. The garage apartment is rented for $200 per month. The household makes one payment on the property. The taxes and insurance are included in the payment. The household states there is no way to identify the portion of taxes, insurance or interest paid on the garage apartment; therefore, the county office worker allows the entire property payment as a shelter cost. The entire $200 payment received for rent on the garage apartment is shown as income.
If a household member is engaged in the management of the property at least 20 hours per week, rental income is considered earned income. Otherwise, the rental income is considered unearned income. If rental income is considered earned income, the earned income deduction explained in FSC 6200 will be applied to the net rental income.
Land rent is income received on an annual basis for the rental of property used in an agricultural endeavor. Since an agreement must be reached regarding the amount of land rent to be received, land rent is considered to be contractual income and will be annualized as instructed in FSC 7519.
In some situations, an individual will live in a house owned by someone else and will make the payments on that house in lieu of a rental payment. In situations like this, the house payment will be considered rental income to the owner. All allowable costs of doing business will be excluded from the gross amount of the house payment before this income is added to the owner's food stamp budget.
Severance pay is an allowance or income payable to an employee upon termination of employment. Severance pay is usually based upon length of service.
Severance payments designated to be paid in monthly installments are considered unearned income in the month(s) received. If, however, a terminated employee receives a lump sum severance payment, the severence payment must be counted as a resource. (Refer to FSC 4950 for handling lump sum severance payments counted as a resource.)
Sick pay not paid directly by the employer but paid through an insurance company will be counted as unearned income. See FSC 5508 for additional information.
Social Security Benefits are monthly checks paid to retired or disabled individuals based upon contributions the individual made while employed. Social Security Benefits are also payable to the individual's spouse and/or children in particular instances. (Social Security benefits are rounded down to the nearest dollar by SSA prior to payment.) Social Security benefits are counted as unearned income.
A full description of the criteria for receipt of SSA may be found in the Unearned Income Appendix.
. Strike benefits are payments by a labor union to a member as a result of a strike. See FSC 1730.
SSI is a Federally administered cash assistance program for aged, blind or disabled individuals with little or no income or resources. SSI is paid on a monthly basis. SSI payments are counted as unearned income.
A full description of the SSI program may be found in the Unearned Income
Appendix.
Under a PASS (Plans for Achieving Self-Support) any blind or disabled SSI claimant or recipient may set aside income for a work goal such as education, vocational training, work related equipment or starting a business. Monies set aside under a PASS are excluded as income and as a resource in the Food Stamp Program.
See FSC 4450, item 12, for the resource exclusion provisions.
See FSC 5405, item 18, for the income exclusion provisions.
Food stamp benefits will not be increased when a household's SSI benefits are reduced, terminated or suspended due to an intentional failure to comply with SSI Program rules. See FSC 12110.
Unemployment insurance is defined as compensation to an unemployed worker in the form of a sum of money paid at regular intervals by a union, employer, or government agency. UI benefits are counted as unearned income. For a full explanation of Unemployment Compensation benefits, see the Unearned Income Appendix.
VA benefits are monthly checks issued to certain individuals who served in a branch of the United States Armed Services. VA benefits are also issued to a veteran's dependents under certain conditions. VA benefits are counted as unearned income.
For VA disability pensions, a monthly check and an annual "adjustment" check is sent. At the end of the year (October for most disabilities), the VA sends out a letter asking the household to verify the past year's income and out-of pocket medical and educational expenses for the veteran and his/her spouse. The VA will either establish a claim for any tiverissuance or make a retroactive income payments. Monthly amounts in the coming year may also be adjusted. If the household receives an income adjustment lump-sum payment, the payment will be excluded as income. Since this is considered an retroactive income adjustment and not a reimbursement for medical expenses, out-of-pocket expenses may be deducted by the household if the member who incurred the expense is aged or disabled.
** Some veterans receive an aid and attendance payment. These payments, which are intended to be used by the veteran to pay the cost of a nurse or attendant, are counted as income in the food stamp budget. If the veteran does use the funds to pay for nursing care or an attendant, these costs will be deducted as a medical expense. See FSC 6500.
See the Unearned Income Appendix for additional information.
Worker's compensation payments are insurance payments made as a result of injury or death on a work site. Such payments may be received by the injured individual on a bi-weekly basis or as a lump sum payment. When a death occurs, a lump sum payment will be made to the individual's survivors. (Lump sum payments are considered a resource - See FSC 4950.) Worker's compensation payments received on a bi-weekly basis are counted as unearned income.
Not all work sites are covered by Worker's Compensation. However, whenever a household claims a job-related injury, or death, the possible receipt of Worker's Compensation Benefits must be explored with the household. See the Unearned Income Appendix for additional information.
Unearned income must be verified at initial application. At recertification, income must be verified if the source of the income has changed or the amount has changed by more than $25.00. Unearned income reported to be unchanged or changed by less than $25.00 must be verified only when information regarding this income is considered incomplete, inaccurate, inconsistent or outdated.
Acceptable verification of unearned income is listed below in order of preference.
Use the WADC screen, case record, or the current payroll. All are available in the county office.
Verification may be obtained through letters or notices from the agency providing the payment. If no letters or notices or available, verification may be obtained through direct contact with the Agency.
SSA and/or SSI income may be verified through the SSA Query Screen (WQRY). The household may also present correspondence from Social Security.
UI benefits will normally be verified via the WESD screen. If the information does not appear on the screen or the information on the screen appears to be inaccurate, the household will be asked to furnish verification. The local ESP office will not be contacted.
The amount of the charitable donation received in each month of the current Federal fiscal quarter must be verified. See FSC 5705 for a list of the Federal fiscal quarters.
Document:
When unearned income is not reverified at recertification, the location of the original verification in the case record must be documented. For example, if verification was obtained in an earlier certification, documentation would read "See certification completed 1-20-99."
If verification is requested, the reason information was considered incomplete, inaccurate, inconsistent or outdated must be documented.
Are'ference list is provided to assist the caseworker in locating the section of policy which describes the process for determining countable income.
Process | Reference |
Income | .FSC 7100 |
Special Processes | |
Institutions | .FSC 1800 |
Battered Women | .FSC 1840 |
Boarders | .FSC 5620 |
Disqualified Individuals | |
Fleeing Felons | .FSC 1623.2 |
IPV...................................... | .FSC 1623.2 |
Requirement to Work | .FSC 1623.2 |
SSM Requirement | .FSC 1623.1 |
Workfare Sanction | .FSC 1623.3 |
Work Registration Violation | .FSC 1623.2 |
Incone From Odd Jobs | .FSC 5512.1 |
Ineligible Alien | .FSC 1621.6 |
Installment Contracts | .FSC 5710 |
Rental Income | .FSC 5715 |
Self-Employment | .FSC 5600 |
Sponsored Aliens | .FSC 1621.7 |
Strikers | .FSC 1730 |
Students | |
Eligible | .FSC 1622.7 |
Ineligible | .FSC 1622.9 |
Faster Children | .FSC 5708 |
016.20.99 Ark. Code R. 027