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Annual Gross
Income
ICF Consulting Determining Income and Allowances Slide 1
Importance of Income
Documentation
Used for determination of
assistance under S+C program
Necessary to qualify persons
evicted from dwelling unit or
discharged from institution under
SHP program
Therefore, need to determine
income of certain beneficiaries
• Documentation and verification is
needed
ICF Consulting Determining Income and Allowances Slide 2
A Few Key Terms
to Start
Low income
• A household at 80% of median or below
Very low income
• A household at 50% of median or below
Annual gross income
• Sum of family income
• Determined using Part 5 (Section 8)
definition
Adjusted income
• Deducts amounts from gross income for
certain specified family costs
ICF Consulting Determining Income and Allowances Slide 3
How is Income
Determination Used?
Underthe SHP and S+C Programs,
income calculations are used for:
• Eligibility
• Targeting of funds
• Occupancy of rental projects
• Subsidy amounts
ICF Consulting Determining Income and Allowances Slide 4
General Requirements
Whose income to count?
• Generally all adult household members
over 18 years of age
Anticipating income
• Required to project a household’s income
– “snapshot” of current circumstances
• Assume that current circumstances will
continue for next 12 months
• Exception is when documentation is
provided that current circumstances are
about to change
ICF Consulting Determining Income and Allowances Slide 5
General Requirements
Verifying Income
• Required to determine income
eligibility of applicants by
examining source documents
Wage and interest statements that show
evidence of annual income
• Verification procedures
Third-party verification
Review of documents
• Self declaration may be used only if
there is no other means available
ICF Consulting Determining Income and Allowances Slide 6
Third-Party Verification
Employer, Social Security
Administration, or public assistance
agency provides information on
income
Obtain written release from household
to authorize third party to release
required information
Provides independent verification of
information
Sample release form can be found in
Appendix H
ICF Consulting Determining Income and Allowances Slide 7
3rd Party Verification
Internet Resource
www.theworknumber.com
ICF Consulting Determining Income and Allowances Slide 8
Review of Documents
Documents include pay stubs and
tax returns
Be sure to verify overtime, tips and
bonuses
Can be used as an alternative to
third-party verifications
NOTE: Copies of tax returns used as
source documents must be certified
by the IRS
ICF Consulting Determining Income and Allowances Slide 9
Assessing Information
Things to consider:
• Pay period
• Variations in pay
• Sources of earned income
ICF Consulting Determining Income and Allowances Slide 10
Comparing Income to
Limits
Compare household and income
information to the appropriate HUD
income limits to determine eligibility
Should have a copy of most recent
income limits to determine eligibility
• http://www.hud.gov/offices/cpd/affor
dablehousing/programs/home/limits/
income/index.cfm
ICF Consulting Determining Income and Allowances Slide 11
Comparing Income to
Limits
Income limits are adjusted by
household size
• Do not count foster children or foster
adults, live-in aides and children of live-in
aides
Steps to comparing income to limits:
1. Locate the PJs geographic area on the
income limit chart
2. Find column that corresponds to the
number of persons in the household
3. Compare the verified income of the
household with the income limit for that
household size
ICF Consulting Determining Income and Allowances Slide 12
Summary – Comparing
Income to Limits
Steps to Project Annual Income
• Step 1: Collect appropriate income
documentation
• Step 2: Calculate the applicant
household’s projected income
based upon documentation
• Step 3: Compare the amount of
projected income against current
HUD income limits
ICF Consulting Determining Income and Allowances Slide 13
Timing of Income
Certifications
Income certification must be
completed before SHP or S+C
assistance begins
Households must qualify at the time
of occupancy to receive rental
subsidy
ICF Consulting Determining Income and Allowances Slide 14
Part 5 Annual Income
Gross amount of income of all adult
household members (18 and older) that
is anticipated to be received during the
coming 12-month period
• Gross amount: before deductions are
taken
• Income inclusions: types of income to be
counted
• Income exclusions: types of income not to
be considered
• Anticipated income: a projection of
earnings over the next 12 months
ICF Consulting Determining Income and Allowances Slide 15
Whose Income to Count?
Part 5 Definition
Income earned by the following groups
of people is not counted:
• Earned income of minors
• Earned income from full time students
after the first $480 (except head or
spouse)
• Income of live-in aides
• Persons with disabilities
Special consideration should be given
to:
• Temporarily absent family members
• Adult students living away from home
• Permanently absent family members
ICF Consulting Determining Income and Allowances Slide 16
Part 5 Income Inclusions
Wages, salaries, overtime,
commission, tips, and bonuses
Net income from a business
Interest, dividends, and net income
of any kind from real or personal
property
Periodic payments
Payments in lieu of earnings
ICF Consulting Determining Income and Allowances Slide 17
Part 5 Income Inclusions
Welfare assistance (not food
stamps)
Periodic and determinable
allowances, alimony and support
All regular pay, special and
allowances for armed forces (not
hostile fire)
ICF Consulting Determining Income and Allowances Slide 18
Part 5 Income Exclusions
Employment income of minors and
live-in aides
Payments for foster care
Lump sum additions to assets
Reimbursement of medical
expenses
Certain increases in income of
disabled household members
ICF Consulting Determining Income and Allowances Slide 19
Part 5 Income Exclusions
Student financial assistance
Hostile fire pay
Job training programs
Sporadic or temporary income
Reparation payments
Earning over $480 for full-time
students (adults)
Adoption assistance over $480
ICF Consulting Determining Income and Allowances Slide 20
Part 5 Income Exclusions
Public housing FSS
Deferred payment of SSI
Refunds/rebates
State agency payment for
developmentally disabled member
Federal Statute
• Food stamps
• Domestic volunteers
• Title V of Older American Act
• Earned income tax credits
ICF Consulting Determining Income and Allowances Slide 21
Part 5: Assets
A cash or non-cash item that can be
converted to cash
Income from assets is recognized
as part of annual income under the
Part 5 definition
• Income earned, not the asset value,
is counted in annual income
ICF Consulting Determining Income and Allowances Slide 22
What to Include as an
Asset
Market value – dollar value on the
open market
Cash value – market value less
reasonable expenses required to
convert the asset to cash
Under Part 5, only the cash value of
an item is counted as an asset
ICF Consulting Determining Income and Allowances Slide 23
Actual Income from Assets
Incomecounted is the actual
income generated by the asset
• Interest on savings or checking
account
Income that is anticipated to be
received from the asset during the
coming 12 months
ICF Consulting Determining Income and Allowances Slide 24
Unique Rules
Asset produces little or no income
• Calculate “imputed” income based
on a Passbook Rate (2%)
• Passbook Rate established
periodically by HUD
• Rule only applies when total cash
value of all assets is greater than
$5,000
ICF Consulting Determining Income and Allowances Slide 25
Imputed Assets
• Example: The Shaw Family
$3000 (average balance over 6 months) in a non
interest-bearing checking account
$5,500 in an interest-bearing savings account.
$150 interest on the savings account
• PJ counts imputed income based on
Passbook Rate:
Imputed income ($8,500 x .02)= $170
Actual income = $150
Included in annual income = $170
ICF Consulting Determining Income and Allowances Slide 26
Unique Rules
Asset disposed of at less than FMV
• Any asset disposed of for less than
FMV during the two years preceding
the income determination must be
counted as if the household still
owned the asset
• Amount to include is the difference
between the cash value of the asset
and the amount that was actually
received in the disposition of the
asset
ICF Consulting Determining Income and Allowances Slide 27
Calculating
Adjusted
Income
ICF Consulting Determining Income and Allowances Slide 28
Adjusted Income
to determine total tenant
Used
payment (TTP)
• A measure of a household’s ability
to pay housing costs
Needed only for calculating:
• Subsidy and tenant’s share of rent
for TBRA
ICF Consulting Determining Income and Allowances Slide 29
Calculating Adjusted
Income
Derived by subtracting any of five
deductions (or allowances) that
apply to the household from the
household’s annual (gross) income
Deductions:
• Elderly or disabled household
• Dependent
• Child care
• Medical expenses
• Disability assistance expenses
ICF Consulting Determining Income and Allowances Slide 30
Allowable Deductions
Not all households are eligible for
all deductions
To determine eligible deductions,
must determine the type of
household:
• Elderly household
• Disabled household
• Family (non-elderly) household
ICF Consulting Determining Income and Allowances Slide 31
Elderly Household
Any household in which:
• The head, spouse or sole member
is 62 years of age or older;
• Two or more persons who are at
least 62 years of age live together;
or
• One or more persons who are at
least 62 years of age live with one
or more live-in aides
ICF Consulting Determining Income and Allowances Slide 32
Disabled Household
A household in which:
• The head, spouse or sole member
is a person with disabilities;
• Two or more persons with
disabilities live together; or
• One or more persons with
disabilities live with one or more
live-in aides
ICF Consulting Determining Income and Allowances Slide 33
Elderly or Disabled
Household Deduction
Eligible households are entitled to a
deduction of $400 per household
Distinction between elderly/disabled
households and non-elderly/non-
disabled households is essential to
applying the allowances correctly
Can only claim only one, not both –
maximum is $400
ICF Consulting Determining Income and Allowances Slide 34
Dependent Deduction
PJs must deduct $480 from annual
income for each household
dependent
HUD defines dependent as any
household member who is not the
head, co-head or spouse, but is:
• Under the age of 18 years; or
• Disabled (of any age); or
• A full-time student (of any age).
Household member must qualify for
the deduction at the time of
assistance
ICF Consulting Determining Income and Allowances Slide 35
Child Care Expenses
Deduction
Reasonable expenses for the care
of a child age 12 or under may be
deducted from annual income if
they:
• Enable an adult family member to
actively seek employment, be
gainfully employed, or further
his/her education; and
• Are not reimbursed
ICF Consulting Determining Income and Allowances Slide 36
Medical Expenses
Deduction
Elderly or disabled households that
have no disability assistance
expenses may claim as a deduction
medical expenses that are in
excess of 3% of annual income
Medical expenses that may be
considered are those that are
anticipated for the coming year that
are not covered by insurance
ICF Consulting Determining Income and Allowances Slide 37
Medical Expenses
Deduction
Allowable medical expenses are
established at the time of
assistance
Medical expenses are permitted
only for elderly or disabled
households
Once household qualifies as an
elderly or disabled household, the
medical expenses of all household
members are considered
ICF Consulting Determining Income and Allowances Slide 38
Medical Expenses
Includes items such as:
• Services of a physician or other
health care professional
• Services of a hospital or other
health care facility
• Medical insurance premiums
• Prescription and nonprescription
medicines
• Dental expenses
ICF Consulting Determining Income and Allowances Slide 39
Medical Expenses (con’t.)
• Eyeglasses and eye examinations
• Medical or health products or
apparatus
• Live-in or periodic medical care
assistance
• Periodic payments on
accumulated medical bills
ICF Consulting Determining Income and Allowances Slide 40
HUD Notice PIH 2004-11
Issued by HUD on July 15, 2004
Addresses calculation of annual
household income under certain
HUD programs
Notice and Medicare Prescription
Drug Card program do not affect
calculation of annual income under
Part 5
• Calculation of annual or adjusted
income for the purposes of HOME
eligibility is not affected
ICF Consulting Determining Income and Allowances Slide 41
Disability Assistance
Expenses Deduction
Can be deducted from annual income
to the extent they exceed 3% of annual
income
Deduction recognizes expenses for
care of disabled person that enables
disabled person or other family
member to work
Expenses may be deducted only if they
are reasonable, not reimbursable, do
not exceed the amount of income
generated by the person enabled to
work, and are in excess of 3% of
annual income
ICF Consulting Determining Income and Allowances Slide 42
Calculating Tenant
Rents
ICF Consulting Determining Income and Allowances Slide 43
Calculating TRA
Assistance Amounts
Establish contract rent for each unit
size (by number of bedrooms) that
is:
• Not usually greater than the FMR or
the HUD-approved exception rent,
or
• Locally determined based on local
market conditions
• For SRO – not greater than Mod
Rehab SRO FMR minus tenant
utilities
ICF Consulting Determining Income and Allowances Slide 44
Payments for TRA
Programs
Subsidy cannot be greater than the
difference between established
contract rent and 30% of household
adjusted monthly income
Must also establish a minimum
tenant contribution
ICF Consulting Determining Income and Allowances Slide 45
S+C – Resident
Occupancy Policies
Occupancy Agreements
• Term of a least one month
• Can automatically renew
Service Commitment
• Participant may be required to
access supportive services as
condition of continued rental
assistance
ICF Consulting Determining Income and Allowances Slide 46
S+C – Vacancy
Payments
Ifunit vacated prior to end of
occupancy agreement
• Assistance to unit continue for
remainder of that month;
• Plus up to 30 additional days
(vacancy loss)
ICF Consulting Determining Income and Allowances Slide 47
S+C - Termination
Participant can be terminated for
violating conditions of occupancy
Must establish formal process that
protects “due process” rights of
participant
Sufficient supportive services
should reduce likelihood
ICF Consulting Determining Income and Allowances Slide 48
General Record
Keeping Requirements
Ensure record-keeping system
effective
Ensure reasonable access
• Keep personal family income
records confidential
ICF Consulting Determining Income and Allowances Slide 49
Tenant Income
Documentation
Files should uniformly contain:
• Application
• Information on household size and
other criteria for eligibility
• Income calculation and
documentation
• Documentation of termination (if
applicable)
ICF Consulting Determining Income and Allowances Slide 50
On-Going Rent and
Income Documentation
Annually reexamine participant income
Document that the correct rents are
charged for each unit
Utility allowances must be current and
deducted appropriately
ICF Consulting Determining Income and Allowances Slide 51
TRA Participant
Selection
Must document
• Process for initial and on-going
income verification
• Application process documents key
information
• Consistently applies eligibility
criteria
ICF Consulting Determining Income and Allowances Slide 52
TRA Participant
Documentation
Case files should uniformly contain
• Landlord contract (if applicable)
• Lease
• TTP calculation
• Income recertification
• Documentation of termination (if
applicable)
ICF Consulting Determining Income and Allowances Slide 53
Tools
Format for Computing Part 5 Annual
Income (Appendix B)
Format for Computing Part 5
Adjusted Income (Appendix E)
ICF Consulting Determining Income and Allowances Slide 54
Tools, cont.
Format for Computing TTP and
Subsidy – Rental Voucher and
Certificate Models (Appendices F
and G)
Sample Verification Forms
(Appendices H and I)
Sample Annual Recertification of
Income Forms for Rental Housing
Projects (Appendix J)
ICF Consulting Determining Income and Allowances Slide 55
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