FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5000 - 5300 SUBJECT: INCOME EXCLUSIONS
DATE: 1-1-87
5000Income
5100Summary
This section describes income which must be considered when determining food stamp eligibility and benefit level. It explains which income must be included in the eligibility determination and provides verification guidelines for this countable income. It also explains which income is to be excluded during eligibility determination.
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 of each household member is counted as income unless the income is excluded as specified in FSC 5400 - 5413.
5200Income Eligibility Standards
Income eligibility standards will be applied to households as provided in this section. The applicable standard is based upon the household's classification as a "Regular" or "Aged/Disabled" or "Categorically Eligible". See the Glossary, Appendix D, for an explanation of an aged/disabled household. All other households are considered regular households. Income standards are applied as described below.
An "aged/disabled" household must meet only the net income eligibility standards. Net monthly income is computed by adding all 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.
5300Definition of Income
For food stamp purposes, household income is defined as being any gain or benefit (usually in the form of money) from any source provided it is not excluded. See FSC 5400 for excluded income. Income is classified as either earned or unearned income. All income must be declared at the time of application, recertification and submission of a monthly report form. Non-monthly reporting households must report changes in the source of income or the amount of income (over $25) within 10 days of the date that the change in income becomes known.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5400 - 5401 SUBJECT: INCOME EXCLUSIONS
DATE: 8-1-91
5400Income Exclusions
Certain types of income are excluded when determining food stamp eligibility. Excluded income is not the same as a deduction from income. Deductions are applied after countable income is determined and are directly related to expenses. (For deductions, see FSC 6100 - 6800.) An exclusion is something which is omitted entirely from consideration.
Only the following types of income are excluded.
Child Support Payments under IV-D
Costs of Producing Self-Employment Income
Earnings of a child
Educational Expenses
(By) Federal Statute
In-Kind Benefits
Irregular Income
Loans
Non-Recurring Lump Sum Payments
Recoupments
Reimbursements
Third Party Beneficiary
Vendor Payments
Earned Income Tax Credits
5401Child Support Payments Which are Excluded
Child Support payments received by AFDC recipients which are obligated to the Child Support Enforcement Unit (IV-D) to maintain AFDC eligibility will not be counted as income. This exclusion applies even when payments due under IV-D rules are not actually turned in to the IV-D Unit. (This does not apply to IV-D refunds which are also known as DEFRA refunds. See FSC 5704.1 for an explanation of these refunds.) This also applies to payments received by former AFDC recipients when held by CSEU and applied to previous AFDC payments.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5401 - 5404 SUBJECT: EXCLUSIONS
DATE: 5-1-95
Child support received through an interception of a State or Federal income tax refund will be excluded as a non-recurring lump sum payment. Child support received through interception of a lump sum Worker's Compensation payment will also be excluded as a non-recurring lump sum payment. See FSC 4950 for instructions on handling lump sum payments.
Also see FSC 5704 and FSC 5704.2-5704.3 for an explanation of child support to be counted as income.
5402Costs of Producing Self-Employment Income
The costs of producing self-employment income are excluded from the household's gross self-employment income. See FSC 5640 for instructions.
5403Earnings of a Child
The earnings of household members who are elementary or high school students will be excluded so long as the students are age 21 or younger, continue to live with a parent, and attend school or GED classes at least half-time. Half-time status will be defined by the school.
This exclusion does not apply to students who have established a residence separate from their parents. It does apply to students who live with their parents as a separate household.
For the purpose of applying this policy, a parent may be a natural, adoptive or step parent or another adult household member who exercises parental control over the student. EXCEPTION - Students who participate as a separate household under the policy in 1630 must live with a natural, adoptive or step parent to be granted this exclusion.
The earned income of a high school student must be counted beginning the month after the student turns 22.
This exclusion applies during school breaks and summer vacation if the student plans to attend when regular sessions resume. If the child's portion of the earned income cannot be differentiated from that of other household members,the income must be evenly prorated among all the individuals who earned the income. The child's prorata share will be excluded as income.
5404Educational Income
Educational income will be excluded in its entirety 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 they are earmarked for or used by a student for allowable educational costs. See FSC 1622 - 1622.7 for instructions.
See FSC 1622.4 for additional information.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 9-1-94 STATUTE
5405(By) Federal Statute
Any income specifically excluded for food stamp purposes by any Federal statute is not counted as income. These income exclusions are listed below.
1.Reimbursements from the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970. (P. L. 91-646, Section 216.)
2.Any payments to volunteers under Title II (RSVP, foster grandparents, senior companions program, and others) of the Domestic Volunteer Services Act of 1973 (P.L. 93-113), as amended. Payments under Title I of that Act (including payments from such Title I programs as VISTA, University Year for Action, and Urban Crime Prevention Program to volunteers) will be excluded for individuals receiving food stamps or public assistance at the time they joined the Title I program. Temporary interruptions in food stamps participation do not affect this exclusion once an initial determination is made. New applicants who were not receiving public assistance or food stamps at the time they joined VISTA will have these volunteer payments included as earned income.
3.Any payments received by individuals from Community Service Employment as authorized by the Older Americans Act (P.L. 100-175). In Arkansas this program is operated by the U.S. Forest Service, the American Association of Retired Persons (AARP), the National Center on Black Aging, the Green Thumb Program and the Area Agency on Aging. Restored benefits will be authorized for any household discovered to have lost benefits after December 1, 1987 due to the inclusion of Community Service Employment funds in a food stamp budget.
4.Payments or allowances made under Federal Law for purpose of energy assistance including utility reimbursements made by the Department of Housing and Urban Development (HUD) and the Farmers Home Administra-tion (FMHA). Examples of Federal payments that are excluded are energy assistance payments provided through the Department of Health and Human Services; payments from the Low-Income Energy Assistance Program; the Community Services Administration's Energy Crisis Assistance and Crisis Intervention Programs and utility assistance payments.
5.Payments received through Youth Incentive Entitlement Pilot Projects, the Youth Community Conservation and Improvement Projects, and the Youth Employment and Training Programs under the Youth Employment and Demonstration Project Act of 1977 (P.L. 95-524).
6.Under the provisions of the Job Training Partnership Act (JTPA), allowances and payments to individuals participating in programs under that Act are excluded as income with the following exception. Exception - The earnings of individuals who are participating in on-the-job training programs under Section 204(5), Title II of the JTPA Act will not be excluded as income unless the participating member is under 19 years of age and under the parental control of another adult member.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 8-1-94 STATUTE
P.L. 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. This includes three Acts:
a)Serve-America: The Community Service, Schools and Service-Learning Act of 1990;
b)The American Conservation and Youth Service Corps Act of 1990; and
c)The National Community Service Act (NCSA). There are about 47 different NCSA programs and they vary by State. Most of the payments are made as a weekly stipend or for educational assistance. The Higher Education Service Learning Program and the AmeriCorps Umbrella Programs come under this Title. The National Civilian Community Corps (NCCC) is a federally managed AmeriCorps program. The Summer for Safety Program is an AmeriCorps program. The School-to-Work Opportunities Program is funded under this Act. In Arkansas, the Delta Service Corps is administered under this Act. Payments, allowances, earnings and payments to individuals participating in programs under this Act are excluded as income.
7.Federal payments to Indians and Eskimos are excluded as stipulated below.
-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).
-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 to Native Americans from judgement awards and trust funds. This exclusion applies on a per-person and not a per-household basis. It applies individually to each payment regardless of the frequency of the payments or the number of months for which the payment was made. These payments are also excluded as a resource. See FSC 4450, Item 7.
-Payments of relocation assistance to members of the Navajo and Hopi Tribes (Pub. L. 93-531).
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 8-1-94 STATUTE
-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 (Montana) (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).
8.Any amount by which the basic pay of military service personnel is reduced to fund the G.I. Bill. Under U.S.C., Title 38 Sections 1411 (b) and 1412 (c), the amount by which the basic pay of an individual is reduced to fund the G.I. Bill will not be considered to have been received by or to be within the control of this individual.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 8-1-94 STATUTE
9.Payments received by farmers under the Disaster Assistance Act of 1988 (P.L. 100-387). When the Secretary of Agriculture determines that a farm emergency exists due to a natural disaster, any payments made pursuant to such determination will be excluded as income. Refer to FSC 4450 for resources excluded by law and FSC 5640.2 for special payments to farmers.
10.Cash donations, based on need, which were received from one or more private, nonprofit charitable organizations to the extent that such donations do not exceed $300 in a Federal fiscal year quarter. This exclusion, which is mandated by the Charitable Assistance and Food Bank Act of 1987 (P.L. 100-232), became effective upon enactment January 5, 1988 and affects eligibility and benefit determinations made on or after February 1, 1988. If a household was denied benefits or issued a smaller allotment because an eligibility or benefit calculation made on or after February 1, 1988 did not include this income exclusion, restored benefits will be authorized. Benefits will be restored at recertification or when the caseworker becomes otherwise aware that a review of a particular case is needed to determine entitlement to a restoration. See FSC 5705 for additional information.
11.Under the Drought Relief Act of 1988, an emergency PA (Public Assistance) or GA (General Assistance) payment which is provided to a third party on behalf of a migrant or seasonal farmworker household while the household is in the job stream. In the job stream means working as a farmworker, seeking work as a farmworker or traveling to another location in other to work or to seek work as a farmworker. Such assistance may include, but is not limited to, emergency vendor payments for migrants or seasonal farmworkers, this exclusion will apply to such payments when received from other states.
12.Payments made to Vietnam veterans under the Agent Orange Veteran Payment Program as authorized by P.L. 101-201. Payments are made to Vietnam veterans who were exposed to Agent Orange while serving in Vietnam at any time between January 31, 1961 and December 31, 1971 and who became totally disabled before their 60th birthday. The Program does not make payments for disabilities or deaths caused by accidental, traumatic or self-inflicted injuries.
Eligible veterans may receive a payment for each year they are disabled during the life of the Program. (The Program will end on December 31, 1994.) The size of each payment depends on the number of eligible applicants, the veteran's age, and the duration of the disability. Survivors of deceased veterans may receive one lump sum payment. The amount of the payment will be dependent on the number of eligible applicants, the year of death and the veteran's age at the time of death.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 8-1-94 STATUTE
P.L. 101-239, the Omnibus Reconciliation Act of 1989, Section 10405, also excluded payments made from the Agent Orange Settlement fund or any other fund established pursuant to the settlement in the In re 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 the future in accordance with P.L. 102-4. Refer to FSC 5723 for additional information.
13.Payments of $20,000 made to U.S. citizens and permanent resident aliens of Japanese Ancestry who were confined, held in custody, relocated, or otherwise deprived of liberty or property during the period December 7, 1941 through June 30, 1946. In order to receive a payment the individual must have been living on August 10, 1988, the date of enactment of the Wartime Relocation Act.
If an eligible individual is deceased at time of payment, such payment may be made to a spouse, to children (equal shares), or to parents, if such persons are living at time of payment.
Exclusion of these payments is mandated by the Civil Liberties Act of 1988 (P.L. 100-383).
14.Payments of $12,000 made to any Aleut Indian who, as a civilian, was relocated by authority of the United States from his home village on the Pribilof Islands or certain Aleutian Island to an internment camp or other temporary location during World War II. Payments of $12,000 will also be made to any Aleut born while his or her mother was interned or relocated during World War II.
Exclusion of these payments is mandated by the Civil Liberties Act of 1988 (P.L. 100-383).
15.Payments received through the Radiation Exposure Compensation Act (P.L. 101-426, Section 6 (h)(2), 10/15/90), provides that amounts paid to individuals under this section will be excluded as income. This law establishes a program to compensate individuals for injuries or deaths resulting from exposure to radiation from nuclear testing and uranium mining in Arizona, Nevada and Utah. Refer to FSC 4450 for resources excluded by law.
16.Payments received from the Federal Emergency Management Assistance (FEMA) under P.L. 93-288, Sec. 312 (d) as amended by P.L. 100-707, Section 105 (i). Funds distributed by FEMA under a disaster or emergency would be excluded as income. Not all payments from FEMA are for disaster or emergency assistance. For payments to be excluded, the disaster or emergency would have to be declared by the President. Refer to FSC 4450 for resources excluded by law.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 2-1-95 STATUTE
17.Payments received through P.L. 100-485, Sec. 301, the Family Support Act, 10/31/88 which amended Sec. 402 (g)(1)(E) of the Social Security Act. The value of any child care payments made under Title IV-A of the Social Security Act, including transitional child care payments, are excluded from income. (These are entitlement payments.) Refer to FSC 6400.
18.Payments received from P.L. 101-508, Sec. 5801, which amended Sec. 402 (i) of the Social Security Act, 11/5/90. "At-risk" block grant child care payments made under Sec. 5801 are excluded from being counted as income and no deduction may be allowed for any expense covered by such payments.
19.Effective, December 13, 1991, income amounts necessary for the fulfillment of a PASS (Plan for Achieving Self-Support) plan under Title XVI of the Social Security Act will be excluded as income. At the next case action (application, recertification or reported change), the county will determine if the household lost any food stamp benefits due to the inclusion as income of funds set aside under a PASS approved by SSA.
Verification of the existence of the PASS and the amounts of resources and income set aside by the plan may be obtained from SSA.
20.The value of assistance to children under P.L. 89-642, Section 11(b) of the Child Nutrition Act of 1966 and P.L. 79-396, the National School Lunch Act.
21.Benefits received from the Special Supplemental Food Program for Women, Infants and Children (WIC) under P.L. 92-443, Sec. 9.
22.Under P.L. 102-586, Section 8, the Child Care and Development Block Grant Act Amendments of 1992, the value of any child care provided or any amount received as payment for such care or reimbursement for costs incurred for such care.
23.Payments made to individuals because of their status as victims of Nazi persecution under P.L. 103-286. This exclusion is effective for eligibility and benefit level determinations made on or after August 1, 1994. If an application was denied because of this income, benefits will be restored if household is otherwise eligible. Restoration will be authorized back to 8-1-94 or the date of application, whichever is later.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5405 - 5405 SUBJECT: EXCLUSIONS - BY FEDERAL
DATE: 2-1-95 STATUTE
24.Earned Income Credits (EIC) payments received as a lump sum or as payments under section 3507 of the Internal Revenue Code by any household member. EICs are advance payments received as part of the employee's paycheck through a reduction in taxes withheld. These payments will be excluded for 12 months, provided the household was participating at the time of receipt of the earned income tax credit and provided the household participates continuously during that 12-month period. Breaks of one month or less due to administrative reasons, such as delayed recertification or missing or late monthly reports, will not be considered as nonparticipation in determining the 12-month exclusion. This exclusion is effective September 1, 1994.
25.Under P.O. 103-22, compensation made to crime victims as authorized by Crime Act of 1984.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5406 - 5408 SUBJECT: EXCLUSIONS - IRREGULAR
DATE: 10-1-91 INCOME, LOANS, LUMP SUM PAYMENTS
5406In-Kind Benefits
In-kind benefits are any gain or benefit which is not in the form of money payable directly to the household. In-kind benefits which are excluded include:
1.Meals;
2.Clothing;
3.Public housing;
4.Produce from a garden; and
5.Shelter provided to an employee.
Example:A farmer hires a household member as a laborer. The household is provided with a house on his farm and utilities free of charge. The house and utilities are considered in-kind benefits and excluded as income.
5407Irregular Income
Any recurring income which does not exceed $30 in a three-month period and which is received too infrequently or irregularly to be reasonably anticipated is excluded as income in both prospective and retrospective budgeting procedures. The three month period begins with the first month in which income is received from a particular source.
5408Loans
All loans except deferred payment educational loans 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 1622.4 for instructions on handling deferred payment educational loans.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5409 - 5409 SUBJECT: EXCLUSIONS - LUMP SUM
DATE: 12-1-93 PAYMENTS
5409Non-Recurring Lump Sum Payments
One-time lump sum payments are excluded as income. Examples of lump sum payments include, but are not limited to the following payments.
1.Federal and State income tax refunds, rebates, or credits.
2.Child Support when received as the result of the interception of a State or Federal income tax refund. Other child support payments which cover a prior period of time will be handled as explained in FSC 5704.
3.Refunds of security deposits on rent or utilities.
4.Lump sum insurance payments such as but not limited to settlements for damages to a household member's property, life insurance payoffs, crop insurance payments and lump sum Worker's Compensation settlements.
5.Loans with the exception of deferred payment student loans. See FSC 1622.4 for instructions on handling student loans.
6.One-time payments for damages received through a court or through an out of court settlement.
7.Cash gifts, awards, or prizes when received on a one-time basis. See FSC 5709 for instructions on handling recurring payments.
8.The proceeds (net) from the sale of personal property when payment is received on a one-time basis. See FSC 5710 when payments are received in installments.
9.Work incentive payments received upon the completion of the program.
10.Retroactive Social Security, or Railroad Retirement payments or any other retroactive benefit payment.
AFDC and SSI lump sum payments will be excluded as a resource so long as the recipient continues to be eligible for the benefit. See FSC 4451 for instructions. If the recipient is no longer eligible for AFDC or SSI, the lump sum payment will be considered a resource.
11.Retroactive wages (net) paid on a one-time basis to correct a previous underpayment or to otherwise adjust wages.
12.Vacation pay (net) when received as a one-time payment after termination or layoff.
13.Severance pay (net) when received as a one-time payment. (See FSC 5716 for instructions on handling severance pay received in installments.)
14.Salary bonuses (net) which cannot be considered to be annual bonuses. See FSC 5502 for additional information.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5410 - 5410 SUBJECT: INCOME EXCLUSIONS
DATE: 3-1-89
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.
5410Recoupments
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 considered excluded income when food stamp eligibility was determined. For example, the Child Support Enforcement Unit (CSEU) determines that an overpayment occurred because an individual kept child support payments for a child who was included on an AFDC grant instead of turning the payment over to CSEU. The payments were excluded as income when received as specified in FSC 5401. The individual no longer receives AFDC but does receive child support through CSEU. CSEU is recouping part of the current child support payment and as repayment of the overpayment. The full child support payment (including the amount recouped) will be counted in the current food stamp budget.
Condition 2 -
The overpayment may not be classified as an Intentional Program Violation if it occurred in:
a) An AFDC payment;
b) A Pell Grant;
c) An SSI payment; or
d) HUD Assistance.
The determination that an overpayment will be classified as an IPV is made by the agency administering the program.
Food stamp benefits will not be increased when a household's SSI benefits are reduced, terminated or suspended due to a household member's intentional failure to comply with a SSI program requirement. See FSC 12110.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5411 - 5411 SUBJECT: INCOME EXCLUSIONS
DATE: 9-1-94
5411Reimbursements
Payments which 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 regular AFDC 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.
Examples of excludable reimbursements which are not considered a gain or a benefit to the household are listed below.
1.Reimbursements or flat allowances for job related expenses such as travel, per diem, uniforms, or transportation to and from a job or a training site. Unless paid through a reimbursement which is over and above the basic wage, these job related expenses are neither deductible nor excludable.
2.Reimbursements for out-of-pocket expenses incurred by volunteers during the course of volunteer work.
3.Medical or dependent care reimbursements.
4.Reimbursements received by households to pay for services provided by Title XX of the Social Security Act.
5.Utility reimbursements made by the Department of Housing and Urban Development (HUD) and the Farmers Home Administration (FMHA). These payments are also called utility assistance payments.
Also, no portion of benefits provided under title IV-A of the Social Security Act which is provided specifically for work-related or child care expenses will be excluded as a reimbursement.
EXCEPTION - Payments or reimbursements for work related or child care expenses made under an employment, education or training program (i.e. - Project SUCCESS Programs) will be excluded.
See FSC 1622.3 for information about handling reimbursements received by students. See FSC 5714 for information about handling reimbursements for normal living expenses.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5412 - 5412 SUBJECT: INCOME EXCLUSIONS
DATE: 10-1-86
5412Third-Party Beneficiary
A beneficiary is an individual for whom a gain or benefit is intended. An 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. The adult relative in an AFDC case is the payee for the eligible children who are considered third-party beneficiaries.
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 prorata 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 prorata amount of $166.66 is excluded from Mrs. Scott's income when calculating a food stamp budget. (It will be included in the aunt's budget if she receives food stamps.)
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5413 - 5413 SUBJECT: INCOME EXCLUSIONS -
DATE: 6-1-96 VENDOR PAYMENTS
5413Vendor Payments
Vendor payments are monetary payments made by a non-household member for household expenses.
These payments must be made by a person outside of the household (with the non-household member's funds) and paid directly to the household's creditors or to a person or organization 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:
1)A friend, employer, agency, church, relative, or former spouse makes payments for household expenses such as rent or utilities directly to the landlord or utility company. If the payment is made from funds not owed to the household, it is a vendor payment and excluded as income.
2)If an employer pays a household rent or house payment directly to the landlord or financial institution in addition to paying regular wages, it is a vendor payment and excluded as income. If the employer provides a house to an employer, the value of the housing will not be considered as income.
3)Separate and identifiable alimony or support payments made by a person outside of the household under a court order or other legally binding agreement which requires direct payment to a third party are vendor payments and excluded as income by the household receiving the benefit. See FSC 6550 for instruction on child support as a deductible expense. (When the court awards part of a pension to an ex-spouse and that payment is diverted by the payor directly to the ex-spouse, only the portion actually received by the household will be considered income. See FSC 5712.)
4)Payments by a government agency to a child care facility for the purpose of providing day care for a household member are considered vendor payments and excluded as income.
5)Payments or allowances made by Department of Housing and Urban Devel-opment (HUD) or by the Farmers Home Administration (FMHA) directly to mortgage holders, landlords or utility providers are vendor payments and excluded as income. (See FSC 5411 for instructions on handling utility reimbursements or utility assistance payments from HUD or FMHA.) Mortgage payments made by state or local housing authorities directly to the mortgage holder are also considered vendor payments and excluded as income.
6)Emergency assistance for a migrant or seasonal farmworker household during the period the household is in the job stream is considered a vendor payment and excluded as income. Such assistance may include, but is not limited to, emergency vendor payments for housing or transportation. See FSC 5405, item 11.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5413 - 5415 SUBJECT: INCOME EXCLUSIONS
DATE: 8-1-91
(7)Assistance payments provided to a third part on behalf of a household under a State or Local General Assistance (GA) program, or another local basic assistance program comparable to GA will be considered a vendor payment and excluded as income so long as no assistance under this program may be provided directly to the household in the form of a cash payment or an instrument which can be converted to cash. (NOTE: No such programs are known to exist in this State; however, payments received under these conditions in other states will be excluded as income.)
Demonstration project cash-out funds are also excluded as income. Cash-out funds are in-kind or vendor payments which 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.
Vendor payments included as income are called Diverted Payments or Diverted Wages. See FSC 5706, Diverted Payments, or FSC 5506, Diverted Wages.
5414Earned Income Tax Credits
Earned income tax credits will be excluded as income regardless of how it is received.
Earned income tax credits may be paid in a lump sum payment or as part of the employee's regular wages. When the 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. See FSC 4621 for Advanced Earned Income Tax Credits as countable resources.
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. The Earned Income Tax Credit (EITC) will be treated as a resource in the month it is received.
5415Verification of Excluded 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: 1) the income is newly reported and is considered questionable; or 2) the income has been reported previously but information about the income is considered incomplete, inaccurate, inconsistent, or outdated.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5415 - 5416 SUBJECT: VERIFICATION OF EXCLUDED
DATE: 8-1-91 INCOME
See the Glossary, definition of "Verification" for additional information.
Acceptable verification of loans is a statement signed by both parties indicating that the payment received was a loan and must be repaid. For student loans, see FSC 1622.4. 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 which establish the source of income; or collateral contacts which establish the source of the income.
For questionable irregular income, the verification must also establish the amount of income and the frequency of receipt.
5416Documentation of Excluded Income
Document:
1.The name of the member who receives the income;
2.The source of the income;
3.The amount of the income;
4.The frequency of receipt; and
5.The reason the income is being excluded.
When excluded income is questionable, document:
1.The reason the income is questionable; and
2.The verification obtained.
For loans document:
1.The amount of the loan;
2.The source of the loan;
3.The verification obtained; and
4.The repayment schedule.
If an affidavit is requested, document the reason the loan was considered questionable.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5500 - 5502 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 3-1-89
5500Included Income
All non-excluded income will be used when determining eligibility and food stamp allotment size. Non-excluded income is divided 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.)
5501Earned Income
Earned income is wages and salaries received for services performed as an employee. 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.
5502Annual Bonuses
For food stamp purposes, bonuses are defined as 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.
Unless a bonus is provided by an employer at approximately the same time and in about the same amount each year, it cannot be considered an annual bonus. For example, if a factory has a good year and gives all of its employees a one-time $100 bonus from its profits, the $100 payment will not be considered an annual bonus because no additional payments are expected. Conversely, if a factory routinely gives all of its employees a ham and a $100 bonus at Christmas, the $100 payment would be considered an annual bonus.
Bonuses which cannot be considered annual bonuses will be excluded as income as non-recurring lump sum payments in both the prospective and retrospective budgeting process. See FSC-5503 for an explanation of the treatment of bonuses considered to be annual bonuses.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5503 - 5505 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 10-1-87
5503Treatment of Annual Bonuses
Annual bonuses which can be reasonably anticipated both in regard to the time of receipt and the amount which will be received will be considered earned income in the food stamp budget.
If the household is subject to monthly reporting as specified in FSC the bonus will be counted as earned income in the budget month received. For example, an MR household receives an annual bonus of $500 in December, 1987. When the household submits its report form for December, 1987, the bonus is reported. The $500 bonus is counted along with the rest of the household's December income when the retrospective budget is calculated to determine the household's January food stamp allotment.
If the household is not subject to monthly reporting, the household's certification period may be scheduled to end in the month before the household anticipates that it will receive the annual bonus. This will allow a variable budget to be calculated at reapplication, so the bonus may be counted in the month of receipt and deleted for any months remaining in the certification period. An alternative is to use the "Review for Change" fields on the EMS-233T, Food Stamp Authorization Document. When the review for change fields (102 and 103) are completed, the case name and number will appear on a report. This will allow the caseworker to add the bonus to the budget in the anticipated month of receipt and to delete it for any months remaining in the certification period.
5504Assistantships
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 considered earned income.
5505Contractual Income
Employees who work under a contractual arrangement will 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 who are paid on an hourly or piece work basis will not have their income prorated over a 12 month period. Examples of contract employees are school teachers and school administrators.
Land rent received on an annual basis is also considered contractural income. See since this is usually considered unearned income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5506 - 5506 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 6-1-96
5506Diverted Wages
Diverted Wages are wages which are legally obligated and payable to the household, but diverted by the employer. The distinction is whether the employer is using wages that otherwise would have to be paid to the household.
Situations in which diverted wages should be counted as income are:
1)The employer owes wages to a household, but diverts them instead to pay for a household expense such as a house payment, doctor bills, utility expenses, etc; or
2)The employer holds money out of the paycheck as a result of a garnishment.
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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5507 - 5509 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 9-1-88
5507Military Pay
Payment for duty in any branch of the Armed Services including the National Guard or Army Reserve will be considered earned income.
The basic pay of some military service personnel is being reduced to fund the G.I. Bill. The amount of the reduction will be excluded as income in the food stamp budget as explained in item 8.
5508Sick Pay/Maternity Benefits
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:
1)The payee is still considered to be an employee and plans to return to work; and
2)The sick pay is received directly from the employer's funds.
5509Training Allowances
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 a description of reimbursements.)
Examples of sources of training allowances are:
1)Work Incentive Programs;
2)Young Adults Conservation Corps;
3)VA Training Programs; and
4)Manpower Training Programs (includes earnings under the JTPA Program).
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.
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 income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5511 - 5512.1 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 6-1-90
5511VISTA Payments
VISTA payments made to volunteers who were not receiving AFDC or food stamps at the time they joined VISTA will be counted as earned income.
5512Wages and Salaries
All money paid to an individual for services performed as an employee will be counted as income. This includes money paid by check or by cash. 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 and this money is to be repaid directly, the money will be considered to be a loan. Loans are excluded as income. See FSC 5408.
Money 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.
5512.1Odd Job Income
Odd job income is that income which a household member receives as earnings from jobs such as 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 which 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 caseworker 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 caseworker may:
.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 collateral contacts; or
.Use some other reasonable method of determining the monthly income.
The caseworker 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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5512.1 - 5514 SUBJECT: INCLUDED INCOME/EARNINGS
DATE: 6-1-90
If any of the household members is capable of maintaining a record of the income from odd jobs, the caseworker 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 income, the household's application will not be denied for its 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 its odd job income, and its statement regarding this income will be accepted.
5513Work Study
Wages paid to students under a government financed work study program. See FSC 1622.4 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 with no exclusions except tuition and mandatory fees actually paid from the work study income.
5514Verification of Earned Income
Earned income must always be verified at initial application. 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.
1.The most recent consecutive check stubs that accurately portray the individual's income.
2.An EMS-97 (earnings statement) properly completed by the employer or designee.
3.A statement from employer if it is signed and indicates the date of the most recent consecutive pay periods and the gross amount received at each pay period.
4.A copy of the employer's wage records for the most recent consecutive pay periods.
5.Collateral contact with the employer by telephone.
6.An EMS-70 (check verification form) indicating the gross amount of each of the most recent checks.
7.Pay envelopes if properly dated and indicating the gross pay.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5514 - 5515 SUBJECT: INCLUDED INCOME/EARNINGS/
DATE: 6-1-90 VERIFICATION
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 - (use of the most recent wages reported).
No household will be denied food stamp benefits solely because someone outside the household failed to cooperate with request for verification. The term "outside the household" will not apply to ineligible students, ineligible aliens, or to individuals disqualified for one of the following reasons: a) intentional program violation; b) failure to provide a social security number; c) non-compliance with the work registration requirements; or d) non-compliance with the workfare requirements.
5515Special Verification
1.Annual Bonuses - Verify the anticipated date of receipt and the amount of the annual bonus, if known.
2.Contractual Income - Verify the terms of the contractual agreement. Verify if the contract specifies a yearly or monthly amount.
3.Diverted Payments - Verify whether the payment was made from funds owed to the household.
4.Sick Pay/Maternity Benefits - Verify whether the individual receiving the pay is still considered an employee. Verify the source of the payment.
5.Tax Credits - Verify the frequency of the payment. Verify the amount of the payment.
6.VISTA Payments - Verify when the volunteer joined VISTA and if they were receiving AFDC or food stamps at the time they joined.
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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5516 - 5610 SUBJECT: DOCUMENTATION OF EARNINGS/
DATE: 10-1-86 SELF-EMPLOYMENT INCOME
5516Documentation of Earned Income
The caseworker must document at least:
.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 incomeverification) cannot or will not cooperate in providing needed verification, the caseworker must document:
.All attempts to obtain verification; and
.The information upon which the income used was based.
5600Self-Employment Income
This section describes the procedures for processing applications which include self-employment income. These procedures also apply to households which own or operate a commercial boarding house. The procedures for handling income received from boarders by a household that does not own and operate a commercial boarding house are also described in this section.
Refer to FSC 4960 for handling resources of self-employed persons.
See FSC 3280 for instructions on the work registration requirements for self-employed household members.
5610Definition
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 daily basis.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5610 - 5622 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 BOARDERS
-A household member is engaged in Tupperware or Avon sales.
5620Commercial Boarding Houses
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:
1.Calculating the total payments to the proprietor from the boarders; and
2.Excluding the costs of doing business.
The costs of the food prepared for boarders may be excluded. See FSC 5622 for additional allowable costs of doing business.
5621Households with Boarders
See for a definition of a boarder.
Boarders are excluded from the household when determining the household's eligibility and benefit level. The household's 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. (Do not deduct these expenses as a shelter cost.)
Example 1 -A boarder pays $15.00 per month to the household in addition to his board payment 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 considered income to the household. The gas bill will not be considered a shelter cost for the household.
5622Allowable Costs of Doing Business
Households with boarders may exclude as income the allowable costs of doing business. The allowable cost of doing business is equal to either of the following amounts:
-The amount of the food stamp allotment for a household size equal to the number of boarders; or
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5622 - 5630 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 BOARDERS
-The actual documented costs of providing room and meals if the actual costs exceed the appropriate food stamp allotment. If the 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 $100 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 7-1-86, the food stamp allotment for a two person household was $147. $147 will be excluded from the $200 total payment as the allowable cost of doing business.
Example 2 -Mr. Green also has two boarders in his household. They also pay $100 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 $155. $155 will be excluded from the $200 total payment as the allowable cost of doing business.
5623Determining Income
Net monthly self-employment income from boarders is determined by:
a)Adding together all direct payments to the household by the boarders, then
b)Subtracting the allowable costs of doing business.
The result of this computation is then added to all other earned income prior to performing the computations required to determine net monthly food stamp income.
5630Handling Other Self-Employment Income
Self-employment income from all other sources (including farming) is handled by:
1.Determining the gross self-employment income for a given period of time;
2.Excluding the allowable costs of doing business;
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5630 - 5632 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 CAPITAL GAINS
3.Determining the monthly net self-employment income; and
4.Showing this amount as gross earned income. (The earned income deduction will be allowed from this amount.)
The exact method of determining the monthly net self-employment income will depend upon several factors:
1.How long the business has been in existence;
2.How the self-employment income is actually received; and
3.Whether the current self-employment income has recently increased or decreased substantially.
Each factor is discussed in the sections of policy below.
5631Determining Gross Self-Employment Income
Gross self-employment income is all proceeds from the sale of goods or for services rendered by the self-employed individuals plus any capital gains.
5632Capital Gains
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 enterprise. For IRS purposes, such proceeds less depreciation are considered taxable income.
The proceeds from the sale of goods or equipment used in a self-employment enterprise will be calculated for food stamp purposes in the same manner as a capital gain for Federal income tax purposes except that depreciation is not allowed.
Therefore, for food stamp purposes, the capital gain is the net proceeds of capital goods and equipment - the sale price less encumbrances, interest penalties, etc.
Net capital gains are counted as part of the household's total self-employment income before the costs of producing the income are excluded.
Example -A farmer purchased a used combine for $6,000.00 in 1973. He depreciated the combine over a period of ten years in the amount of $6,000.00. In 1985, he sold the combine for $2,000.00. He owed nothing on the combine. For food stamp purposes, the entire proceeds, $2,000.00, is counted as part of the income before exclusions for 1985. This is true even though no income from the sale was used for Federal Income Tax purposes.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5632 - 5634 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 DETERMINING GROSS INCOME
NOTE:Lump-sum payments from the sale of property not connected with a self-employment enterprise will be handled according to
5633Factor One - How Long Has the Business Been in Existence
If a household's self-employment has been in existence for less than a year, average the income earned to date over the period of time the business has been in operation. The resulting monthly income will be used as projected monthly income for the upcoming certification.
If the business has been in operation for such a short period of time that sufficient information to arrive at a reasonable projection is not available, certify the household for short periods of time until the business has been in operation long enough to determine an accurate projection.
If the operation has been in existence for more than one year, the method of determining the income depends upon factor two.
5634Factor Two - How is the Self-Employment Income Received
On an Annual Basis
Self-employment income which represents an individual's annual income, but which is received in a short period of time is averaged over a 12 month period.
For example: If self-employment income received by a farmer represents the farmer's annual support, the income will be averaged over a 12 month period. The farmer's self-employment income will be annualized even if the household receives income from other sources in addition to self-employment.
On a Monthly Basis
Self-employment income which is received on a monthly basis, but which represents a household's annual support will normally be averaged over a 12 month period. If the averaged amount does not accurately reflect the household's actual monthly circumstances due to a substantial increase or decrease in business, see below.
Intended to Meet the Household's Needs For Only Part of the Year
Self-employment income which is intended to meet the household's needs for only a portion of the year will be averaged over the period of time the income is intended to cover.
Example:Vendors who work only in the summer and supplement their income from other sources during the balance of the year will have their self-employment income averaged over the summer months rather than a 12 month period.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5635 - 5640 SUBJECT: SELF-EMPLOYMENT INCOME - DATE: 10-1-86 DETERMINING GROSS INCOME
5635Factor Three - Has the Current Self-Employment Income Increased or Deceased Substantially
When the self-employment income has increased or decreased substantially, the household's actual circumstances are not reflected in the food stamp budget.
To correct this, anticipate the household's current self-employment income and project it over the period of certification. To anticipate the household's current income, carefully review the most current income. Review several month's income if possible. Discuss with the household whether they expect their income to continue at its current level. Consider whether the reported increase or decrease is seasonal in nature.
If the change in income is seasonal, do not attempt to anticipate income. Average the income as instructed in
If the increase or decrease is not seasonable in nature, anticipate the current income.
To determine self-employment income that must be calculated on an anticipated basis, complete the following actions:
1.Starting with the month of application, anticipate the yearly gross self-employment income based upon the household's current income. Include any capital gains anticipated to be received in the next 12 months.
2.Subtract the anticipated yearly allowable costs of producing the self-employment income based upon the household's current costs.
3.Divide the resulting amount by 12.
NOTE:This amount is used in successive certification periods during the next 12 months, unless a new average monthly amount must be calculated due to another substantial change in income or a change in the amount of anticipated capital gains. In this case, the newly anticipated amount will be used in any additional certification periods.
5640Calculating Self-Employment Income
The following steps will be taken when calculating self-employment income:
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5640 - 5640 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 DETERMINING NET INCOME
Step 1 - Determine Net Self-Employment Income
Total all gross self-employment income for the period of time selected. Include the calculated value of capital gains.
Exclude the costs of producing the income. Form SS-226 will be used for non-farm income. Form SS-227 will be used for farm income. (If the household's income is from a farm enterprise, see 5640.2.)
Annualize the net income, if possible, UNLESS:
a)Current circumstances are not accurately presented (anticipate the yearly income);
b)The income is only a portion of the annual support (average income over the period of time intended to cover); or
c)The self-employment enterprise has been in existence less than one year (project the income by averaging over the period the business has been in operation).
The following items will not be allowed as a cost of producing self-employment income:
1.Payments on the principal of the purchase price of income-producing real estate and capital assets, equipment, machinery, and other durable goods;
2.Net losses from earlier years;
3.Federal, State and Local income taxes;
4.Money set aside for retirement purposes;
5.Other work-related personal expenses (such as transportation to and from work) accounted for by the earned income deduction; and
6.Depreciation
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5640 - 5640 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 9-1-88 DETERMINING NET INCOME
Other bonafide costs of producing the income may be allowed.
Examples of such costs include:
1.The identifiable costs of labor (except salaries drawn by the self-employed individuals);
2.Stock;
3.Raw material;
4.Seed and Fertilizer;
5.Property rental;
6.Utilities paid on the business property;
7.Interest paid on loans used to purchase income producing land, buildings, equipment, supplies or other income producing property;
8.Insurance premiums paid on buildings, equipment or income producing property;
9.Taxes paid on income producing property; and
10.The costs of room and meals for those self-employed people whose business takes them away from their homes and requires them to remain at the job site overnight. Examples include - carpenter who has to travel to another city to complete a job or a person who sells arts and crafts at fairs in various cities.
When a self-employed household uses its residence in the self-employment enterprise, do not allow the utility costs, rent or interest on a mortgage on the residence. These items will be used as shelter costs in the food stamp budget with the following exceptions:
Exception 1 -If the household uses its residence in the self-employment enterprise, and has identifiable utility costs such as long distance charges, these may be allowed. The household must be able to identify these costs specifically - For example, separate meters for utilities used in the production of a item for sale before the costs will be allowed.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5640 - 5640.1 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 10-1-86 FARM LOSS DEDUCTION
Exception 2 -If the majority of the residence is used in the self- employment enterprise, the utility costs and the rent (or the interest on the mortgage) will be allowed as a cost of producing income. No portion of the costs may then be considered a shelter cost. For example, if a household owns a motel and lives in one of the units, all of the utility costs and the interest on the mortgage would be allowed as a cost of doing business. No shelter costs would be allowed.
Step 2 - Determining Net Monthly Food Stamp Income
To determine the net monthly food stamp income for households with income from self-employment enterprises other than farming:
1.Add the monthly net self-employment income to any other earned income received by the household;
2.Add the total monthly earned income, less the earned income deduction, to the total monthly unearned income received by the household; and
3.Calculate and subtract any applicable deductions such as standard deduction, dependent care deduction, and excess shelter costs to arrive at the net monthly income for the household.
5640.1Farm Loss Deduction
When determining the net monthly food stamp income for households with a member engaged in a farming enterprise, farming losses will be deducted from any other countable income the household has if:
a.The farmer's cost of producing the farm income exceeded the gross income from the enterprise, and
b.The farmer received or expects to receive annual gross proceeds of $1,000 or more from the farming enterprise.
Only allowable costs of producing self-employment income will be excluded when determining if the farmer had losses which may be deducted.
When a household's farm operation shows a loss, complete the following actions:
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5640.1 - 5640.2 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 1-1-91 SEPARATE ENTERPRISES
1.Determine the monthly amount of the loss. This is calculated by excluding the allowable costs of producing the income from the gross farm income. If the net amount is a "loss", prorate the loss over a 12 month period. Enter the prorated amount in field 50 of the EMS-233, Food Stamp Authorization Document, and subtract it from all other household income.
NOTE:If the net amount is a gain (not a loss) it will be handled as earned income and entered in field 35 of the EMS-233 along with any other earned income declared by the household.
2.Apply the Gross Income Eligibility Pretest after the farm loss has been subtracted if the household is classified as a "regular" household (no aged or disabled members).
To determine if the household meets the pretest level, add gross earned income (field 35) to total unearned income (field 49) and subtract farm losses (field 50). The result is the household's gross income for purposes of the pretest.
3.If the household is eligible after the pretest subtract the earned income deduction (if applicable), the standard deduction, dependent care, medical deduction and shelter costs will be deducted in the same manner as for any other household.
See the "Food Stamp Basis of Issuance Tables, Exhibit A" for the current pretest income levels.
5640.2Special Payments To Farmers
Person who are self-employed in a farm enterprise may receive cash payments, loans, and/or commodity certificates from a variety of government sponsored programs. Any loan received, including low-interest loans received as disaster assistance, will be excluded as income. See FSC 5408 for discussion of loans. Any payments received under the Disaster Assistance Act of 1988 will be excluded as income and resources, provided a farm emergency is determined due to a natural disaster. See FSC 4450 for resources excluded by law and FSC 5405 for income exclusions. Any insurance settlement received as a result of a loss, including a crop loss, will handled as a lump-sum payment. When the Secretary of Agriculture determines that a farm emergency exists due to a natural disaster, any payment to farmers made as a result will be excluded from income and resources for food stamp purposes. Certificates received from such programs as the Payment-In-Kind Program or programs administered through the Commodity Credit Corporation (CCC) will be handled as instructed below.
PIK payments and commodity certificates are based upon specific crop years. When a household reports receipt of a PIK or CCC payment, the caseworker must determine if the payment is based on the crop year used to compute the income currently being shown in the household's food stamp budget. If the payment is based on the crop year currently
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5640.2 - 5641 SUBJECT: SELF-EMPLOYMENT INCOME -
DATE: 1-1-91 SEPARATE ENTERPRISES
reflected in the food stamp budget, the caseworker must recalculate the household's self-employment income to include the payment. If the reported payment is for the current crop year (e.g. - payment received in 1987 for the crop year 1987), the payment will be included as income when the farm income for that crop year is calculated.
The household may receive a commodity certificate. These are certificates which represent so many bushels of a commodity. When issued, the certificate has a face value. based upon the current per-bushel cost of the commodity represented. For example, a commodity certificate may represent 500 bushels of soybeans. The farmer may sell these certificates, hold the certificates or may exchange the certificate for seed or feed to be used in the farm enterprise.
If the commodity certificate is based on the crop year used to compute the income currently being shown in the household's food stamp budget, the worker will handle receipt of the certificate in one of the methods stipulated below.
.If the household plans to cash in the certificate and use the funds for anything other than feed or seed during the certification period, include the value of the certificate will be included as part of the household's gross self-employment income.
.If the household plans to exchange the certificate for feed or seed or plans to cash it in and use the proceeds for feed or seed, the value of the certificate will be disregarded as income or as a resource.
.If the household plans to hold the certificate, the face value of the certificate will be disregarded for up to one year from the date of issue. Any certificate held for longer than 12 months from the date of issue will be considered a non-liquid resource.
If the commodity certificate is not for the crop year used in the household's current food stamp budget, the certificate or any income resulting from the sale of the certificate will be disregarded until the self-employment income for that crop year is calculated.
5641Separate Enterprises
When self-employment income is derived from two or more separate enter- prises with no farm operations involved, combine the gross income and the costs from each business to determine net self-employment income.
When farm operations are involved, calculate net self-employment as instructed below:
Step 1.Determine the gross income from the farm operation;
Step 2.Determine the allowable costs of producing the farm income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5641 - 5643 SUBJECT: SELF-EMPLOYMENT PARTNERSHIP/
DATE: 4-1-90 VERIFICATION/DOCUMENTATION
Step 3.Exclude the allowable costs from the gross income.
If the farming operation shows a profit, combine the farming operation with the other enterprises as instructed above.
If the farming operation shows a loss, do not combine the farming operation with the other enterprises. The loss will be deducted as specified in above.
5642Partnerships
When a household member is involved in a self-employment enterprise with one or more partners, determine the household's share of the income by:
1.Determining the gross income for the enterprise;
2.Determining the net income by excluding the allowable costs of producing the income; and
3.Dividing the net income by the number of partners involved in the enterprise with the following exception.
EXCEPTION:When the profits of a partnership are prorated rather than divided equally, prorate the net income in the same manner.
The household's share of the income from the partnership will be used in the food stamp budget.
5643Closely Held Corporations
For food stamp purposes, a closely-held corporation is one with only one shareholder or just a few shareholders. Normally, stock from a closely-held corporation is not placed on the market. An owner or employee of a closely held corporation or other corporation is not a self-employed person. If the person receives a salary from the corporation, he is considered an employee of the corporation and the salary will be counted as earned income as specified in FSC 5501. Shareholders who receive dividends will have the dividends counted as unearned income as specified FSC 5711. Shareholders are entitled to deduct neither the costs of producing self-employment income nor the earned income deduction. Income from a closely-held corporation may be verified through the corporation's books, or the employee's pay stubs, or the tax records of the corporation and the employee. This includes Form 1120, U.S. Corporation Income Tax Return, or Form 1120-A, U.S. Corporation Short-Form Income Tax Return, or Form 11205, U.S. Income Tax Return for an S Corporation, and Schedule K-1 Form 11205, Shareholder's Share of Income Credits, Deductions, Etc.
The resources of a corporation belong to the corporation and not the individual regardless of whether or not they are income producing. This includes bank accounts which are in the name of the corporation.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5643 - 5650 SUBJECT: SELF-EMPLOYMENT PARTNERSHIP/
DATE: 4-1-90 VERIFICATION/DOCUMENTATION
If an individual owns stock in a closely-held corporation, the stock is counted as a resource unless it is essential to the individual's employment. To the extent that an employee of a corporation must hold stock in the corporation as a condition of employee, the stock will be considered essential to employment. For example, a farmer has incorporated his farm, all of the corporation's assets are related to the farm, and the farmer is the corporation's sole employee. The corporation's stock is excluded as a resource to the farmer. To qualify for the stock exemptions, an individual must be working a minimum of 30 hours weekly or receiving weekly earnings at least equal to the Federal minimum wage multiplied by 30 hours. If the value of closely-held corporate shares is not readily available, the value may be determined by subtracting corporate liabilities from assets and prorating the difference among the various shareholders based upon the percentage of shares held.
5650Verification/Documentation
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 it 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 will 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 along with receipts for allowable costs of producing the income may also be accepted.
If the household states it has no records at all, the EMS-226 or EMS-227 based will be completed upon the household's declared income and expenses. This method may only be used temporarily so the household must be instructed to furnish records of income and receipts to verify costs at the next scheduled recertification. As soon as an Income Tax Return reflecting self-employment income is available, it will be requested.
Document:
1.Type of self-employment enterprise;
2.How the household receives this income - e.g. monthly, annually;
3.The length of time the enterprise has been in existence;
4.The figures used to arrive at the net self-employment income (EMS-226 or EMS-227) and the figures used to determine the monthly income;
5.The figures used to calculate any farm loss; and
6.The verification obtained.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5660 - 5700 SUBJECT: SELF-EMPLOYMENT VERIFICATION/
DATE: 10-1-86 DOCUMENTATION/UNEARNED INCOME
5660Certification Periods
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 is such that it 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.
Do not assign a 12 month certification period unless all these conditions are met or the household is subject to monthly reporting as specified in FSC 12210.
For those self-employed households that receive their annual income in a short period of time, the initial certification period will be assigned to bring the households into an annual cycle. In order to accomplish this, schedule the recertification at the time the household normally receives all or a majority of its annual income or have the annual cycle coincide with the filing of the household's income tax return.
5700Unearned Income
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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5700 - 5701 SUBJECT: UNEARNED INCOME
DATE: 8-1-91
Common sources of unearned income are listed below in alphabetical order:
AFDC Rental Income
Allotments Severance Pay Received in
Installments
Child Support/Alimony Payments
Sick Pay
Contributions
Social Security Benefits (SSA)
Diverted Payments
Strike Benefits
Educational Benefits
Supplemental Security Income (SSI)
Foster Care Payments
Unemployment Insurance Benefits
Installment Contracts (UI)
Interest, Dividends, Royalties Utility Assist. from HUD or Housing
Authority
Pensions
Veteran's Assistance Benefits (VA)
Railroad Retirement
Workman's Compensation
Reimbursements for Normal
Living Expenses
5701AFDC
Payments through the AFDC (Aid to Families with Dependent Children) Program are considered to be unearned income. AFDC is paid on a monthly basis and is based on a standard of need for a particular household size. Households receiving AFDC may also receive other income as long as the income does not exceed the standard of need.
AFDC payments vary widely from state to state. Also, various payments are received by AFDC recipients in other states which are not by AFDC recipients in this State. These payments will be handled as specified below.
In some states an AFDC recipient will receive a clothing allowance when children enter or return to school or daycare. Any such allowance a state agency provides no more frequently than annually is excluded as income provided there was no corresponding reduction in the AFDC payment for the same month. If a corresponding reduction in the AFDC payment was made, the allowance will not be excluded as income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5701 - 5702 SUBJECT: UNEARNED INCOME
DATE: 5-1-95
In some states, housing assistance payments are made to a third party on behalf of a household residing in transitional housing for the homeless such as a welfare hotel. The entire amount of any vendor payment made for transitional housing for the homeless will be excluded.
Food stamp benefits will not be increased when a household member's AFDC benefits are reduced, suspended or terminated due to non-cooperation with Project SUCCESS, non-cooperation with the Office of Child Support Enforcement or disqualification for an intentional program violation. See FSC 12110 for instructions.
5702Allotments
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 considered unearned income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5703 - 5704 SUBJECT: CHILD SUPPORT
DATE: 6-1-96
5703Annuities/Annual Lottery Payments
Annuities are considered 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 considered unearned income.
Annuities and lottery winnings that are 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.
5704Child Support/Alimony Payments
Alimony payments, except payments to AFDC recipients, made directly to the household from a non-household member are counted as unearned income. (See FSC 5704.1 for information about alimony payments received by AFDC recipients.) These may be payments which have been ordered by a court, or voluntary payments made by a non-household member.
Child support payments made directly to a household member from a non-household member are considered 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 considered unearned income. Collection fees, postage expenses are other fees charged by the court will be neither deducted or excluded from the child support payment.
When child support is received sporadically by individuals not receiving AFDC, the caseworker will attempt to establish some pattern of payment. (See FSC 5704.1 for instructions on handling child support received by AFDC recipients.) 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 or vary to the extent 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 it later becomes possible for the caseworker to determine that a pattern of payment has been established, 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 considered to be a lump sum payment and counted as a resource in the month of receipt. See FSC 4950 for instructions on handling lump sum payments.
Legally obligated child support paid by a household member to someone who is not a household member is deductible. See FSC 6550 for instructions.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5704.1 - 5704.3 SUBJECT: CHILD SUPPORT
DATE: 8-1-91
5704.1CSEU Payments to AFDC Recipients
Under Title IV-D, the state is assigned rights to all child support and/or alimony payments received by AFDC participants and these payments are excluded as income. See FSC 5401. Through the Child Support Enforcement Unit, the State seeks child support payments on its behalf, while at the same time providing AFDC payments to needy families. Up to $50 of the child support payments collected on behalf of individuals receiving AFDC are refunded to the individual. Any money remaining after distribution of the refund is distributed to the federal and state governments as reimbursement of the AFDC payment provided.
Child support refunds, also called DEFRA refunds, are automatically calculated into the household's food stamp budget as long as the refund recipient receives AFDC. For various reasons, some DEFRA refunds exceed $50. These refunds are also automatically calculated into the household's food stamp budget. See EMSUM 9000-9500 for additional information.
If the monthly child support payment exceeds the AFDC grant, the AFDC case will close. Any refunds received by a household after its AFDC case has closed must be manually added to the food stamp budget for the month in which the refund is to be received. See FSC 5704.3 below for additional information.
5704.2CSEU Payments to Medicaid Recipients
Child support received directly from the absent parent on behalf of Medicaid recipients must be sent by the household to CSEU. CSEU later returns the child support payments, or a portion of the payments, to the household. These payments will not, be counted as income until they are returned to the household by CSEU.
5704.3CSEU Payments to Individuals Not Receiving AFDC/Medicaid
CSEU also offers its services to individuals who are not receiving AFDC. Child support payments which are collected for children not included in an AFDC case are considered unearned income. CSEU charges non-AFDC households a collection fee; however, this fee can be neither deducted or excluded so the entire gross amount collected and disbursed to the household will be counted in the food stamp budget with the exception of 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 CSEU. These payments will be handled as a lump sum payment is the month of receipt. See FSC 4950.
EXAMPLE 1 -A household normally receives $100 per month child support through CSEU. This amount has been included in the food stamp budget for the certification period June through
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5704.3 - 5704.4 SUBJECT: CHILD SUPPORT
DATE: 3-1-91
November. On December 15, the household submits another food stamp application. $300 child support is declared on the application. At its 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 $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 CSEU will withhold support received by individuals no longer receiving AFDC in order to reimburse previous AFDC payments. Such individuals are considered to have an "AFDC 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 arrearage. See FSC 5401.
At other times, an absent parent will pay 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 arrearage, CSEU will send the extra money to the household. If this money has not already been counted in the household's food stamp budget, it 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 14323 if household's child support payment is expected to decrease.
When CSEU 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 CSEU 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 CSEU plus the collection fee will be counted in the food stamp budget.
5704.4Verification of Child Support Received Through CSEU
For verification of DEFRA refunds received by AFDC clients, see the WFSI or WFMM screen. Information about accessing and reading the WFSI screen may be found at EMSUM 9200. Information about accessing and reading the WFMM screen may be found at EMSUM 9300.
For verification of non-AFDC related child support received through CSEU, see the WFTC screen. Information about accessing and reading the WFTC screen may be found at EMSUM 20370.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5705 - 5705 SUBJECT: UNEARNED INCOME
DATE: 9-1-88
5705Contributions
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, which 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 9.) 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 which 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 would be excluded as income. $100 of the September donation would also 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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5706 - 5708 SUBJECT: UNEARNED INCOME
DATE: 5-1-95
5706Diverted Payments
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:
1.Public assistance grants (AFDC or SSI) diverted to a protective payee for the purpose of managing the household's expenses.
2.Monies diverted from court-ordered support or alimony payments to a third party for a household expense - e.g. the rent payment is made from the support payment by the court. (This applies only when there is not a court order or other legally binding agreement which requires direct payment to a third party.)
3.Monies diverted from funds owed to the household to pay a third party for a household expense - e.g. VA deposits the Veteran's check in a special account and the bank authorized payments for household expenses.
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 assis-tance 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.)
5707Educational Benefits
Scholarships, fellowships, grants, deferred payment loans, Veterans and Social Security educational benefits are considered unearned income to the extent that such benefits exceed the amount which may be excluded for tuition, mandatory fees and/or specific educational costs. For further information about determining the amount of educational benefits to be counted as income, refer to FSC 1622.4.
5708Foster Care Payments
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 which 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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5708 - 5710 SUBJECT: UNEARNED INCOME
DATE: 4-1-90
Option 2 -The household may elect to include the person in foster care as a household member. If the person in care is included as a household member, the foster care payment will be included as income to the household.
When a person in foster care is excluded as a household member, this person will be listed on the EMS-233 but will be coded as a ineligible member by entering a code 4 in the member status field. The foster care payment will be shown in the member segment only as other income.
5709Gifts/Cash Prizes
If a household member receives a monetary gift or prize on a one-time basis, it will not be considered income to the household in either a prospective or a retrospective budget. (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 which exceeds $30 per quarter, the gift or prize will be considered unearned income and counted in the household's budget. 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.
5710Installment Contracts
Income resulting from an owner-financed sale of property is counted as unearned income in a food stamp budget. (This means that the earned income deduction will not be applied to such income.) However, for the purpose of determining the portion of the payment received which is to be counted as monthly income, the installment contract will be considered a self-employment enterprise.
To determine the amount to be considered as monthly income in the food stamp budget, the caseworker may exclude the following items as costs of doing business.
1.Costs incurred by the holder of the installment contract for real estate taxes and/or insurance on the financed property.
2.Costs incurred by the holder of the installment contract for interest payments on a pre-existing mortgage on the financed property - (e.g. - a man sells a house upon which he is still making payments).
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5710 - 5710 SUBJECT: UNEARNED INCOME
DATE: 10-1-87
3.On a one-time, as-incurred basis, broker's fees paid by the holder of the installment contract. (For example, if a property is sold on June 11, and the household reports this sale on June 18, the broker's fees may be excluded from the July payment.)
Example 1 -Mr. Green owns 20 acres of land which he purchased in 1980. 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 1986, 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.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5711 - 5711 SUBJECT: UNEARNED INCOME
DATE: 10-1-87
5711Interest, Dividends, Royalties
The following are examples of interest, dividend, or royalty payments which are considered unearned income to the household:
1.Interest
Interest received by a household for monies held in a savings/checking account or any other account on which interest is paid to the household are considered unearned income. This is true even if the interest is not paid directly to the household but added to the account's balance.
An interest payment will be counted as unearned income in the month received, or prorated over the period of time it 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.
2.Dividends
Dividends are payments received from shares of stocks, bonds or insurance owned by the household. Such payments may be received on a monthly, quarterly or annual basis. They are considered as a gain or benefit to the household and are counted as unearned income either in the month received or prorated over the period of time the payment was intended to cover.
3.Royalties
Royalties are payments received as profits from the sale of a product, payments from oil or gas leases, or payments made from the sale of items under a patent.
These payments may be issued on a monthly, quarterly, or annual basis and will either be included as income in the month of receipt or prorated over the period of time the payment is intended to cover.
NOTE:When the household is subject to monthly reporting as specified in interest, dividends, and/or royalties are counted as income in the budget month of receipt.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5712 - 5713 SUBJECT: UNEARNED INCOME
DATE: 4-1-90
5712Pensions
A pension is defined as a fixed sum paid regularly under certain conditions to a person or a surviving dependent following years of military service or employment.
Examples of households with members who may receive pensions are:
1.Households with aged or disabled members with a prior military service or members who are disabled or under age 18 and who are a surviving dependent of a person with prior military service;
2.Households with members retired (by age or disability) from a private firm like a factory or a utility company;
3.Households with members who retired from Federal or State employment by reasons of age or disability and their surviving dependents if the dependents are aged, disabled or minor children; or
4.Households with members retired from a school, college, or university due to age or disability.
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 which the court allocated to him. He receives an annual statement which indicates his total benefit and the wife's portion of the total amount. Only the portion of his retirement benefits Mr. G. actually receives will be counted in his food stamp budget.
5713Railroad Retirement
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.
See the Unearned Income Appendix for additional information.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5714 - 5714 SUBJECT: UNEARNED INCOME
DATE: 10-1-87
5714Reimbursement for Normal Living Expenses
If a household is reimbursed for normal household expenses such as rent, mortgage, personal items or food which 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.)
NOTE:If the reimbursement is provided by an employer and considered compensation for actual work performance, the income will be counted as earned income.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5715 - 5716 SUBJECT: UNEARNED INCOME
DATE: 4-1-90
5715Rental Income
NOTE:This section does not deal with income from boarders. See FSC 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". The 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 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 7513.6.
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 it is added to the owner's food stamp budget.
5716Severance Pay Received in Installments
Severance pay is defined as 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, it must be counted as a resource. (Refer to FSC 4950 for handling lump sum severance payments counted as a resource.)
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5717 - 5721 SUBJECT: UNEARNED INCOME
DATE: 9-1-94
5717Sick Pay
Sick pay will be considered unearned income when it is not paid directly by the employer but is paid through an insurance company. See FSC 5508 for additional information.
5718Social Security Benefits (SSA)
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.)
A full description of the criteria for receipt of SSA may be found in the Unearned Income Appendix.
5719Strike Benefits
Payments by a labor union to a member as a result of a strike. See FSC 1730.
5720Supplemental Security Income (SSI)
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.
A full description of the SSI program may be found in the Unearned Income Appendix.
Under 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 14, for the resource exclusion provisions.
See FSC 5405, item 19, 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.
5721Unemployment Insurance (UI) Benefits
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. For a full explanation of Unemployment Compensation benefits, see the Unearned Income Appendix.
FOOD STAMP CERTIFICATION MANUAL SECTION: INCOME
5723 - 5725 SUBJECT: UNEARNED INCOME
DATE: 4-1-92
5723Veteran's Administration Benefits (VA)
VA benefits are monthly checks issued to certain individuals who served in a branch of the United States Armed Services. VA checks are also issued to a veteran's dependents under certain conditions.
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-o