State regulations require all nonexempt income must be counted towards the cash grant. Disregard shall be allowed for certain disability-based income (DBI) and other earned income for determination and computation of the Net Nonexempt Income (NNI).
$225 and 50% Earned Income Disregards
· Family has earned income only
If the family has earned income only, the first $225 and 50% of the earned income is disregarded when determining the NNI to calculate the family’s grant amount.
· Family’s DBI is less than $225
If the family’s DBI is less than $225, all of the DBI is disregarded and the unused amount of the $225 plus 50% of the remaining earned income is disregarded. Any remaining earned income is treated as part of the family NNI.
· Family’s DBI is more than $225
If the family’s DBI exceeds $225, only the first $225 of the DBI and 50% of any earned income is disregarded. Any remaining DBI and remaining earned income is treated as part of the family’s NNI.
To determine the amount of Net Nonexempt Earned Income (NNI) for the month, the following steps shall be taken:
Example 1 – DBI less than $225:
A nonexempt Assistance Unit (AU) of three (an adult and two children) has gross earned income of $800 per month. The children each receive $100 per month in unearned income from the absent parent's disability claim.
Example 2 – DBI greater than $225:
A nonexempt AU of three (an adult and two children) has gross earned income of $600 per month. The children each receive $200 per month in DBI from the absent parent's disability claim.
Example 3 – Earned Income Only:
A nonexempt AU of three (an adult and two children) has gross earned income of $800 per month.
Scenario 4 – Minor Parent
Minor parent is receiving aid for herself and her dependent child. Minor parent lives with both her parents and a sibling. One senior parent earns $1300 per month from full-time employment. The other senior parent $125 in State Disability Insurance benefits. The minor parent has no income. This is a nonexempt AU.
Allow the following Earned Income Disregards for any grant computation between July 1, 2011 and September 30, 2013:
· $225 Income Disregard
Use as a deduction from Disability-Based Income.
· $112 Earned Income Disregard
Use any remainder from the $225 DBI Disregard or $112 (whichever is less) as a deduction from the Earned Income.
· 50% Earned Income Disregard
Use as a deduction from Earned Income.
To determine the amount of NNI for any month during July 2011 and September 2013, the following steps are required to be taken:
Self-employed recipients have the choice of basing their business expenses on a standard deduction of:
· 40% of gross income; or
· Actual verified expenses.
Once the self-employed person chooses, the recipient cannot change the method until renewal or every 6 months, whichever occurs first.
Self-employed recipients who choose the 40% disregard, shall be allowed a 40% disregard on gross self-employed income.
Allowable business expenses include, but are not limited to:
· Identifiable costs of labor;
· Raw material;
· Interest paid to purchase income producing property;
· Insurance premiums; and
· Taxes paid on income producing property.
The following are not allowed as a business expense:
· Payments on the principal of the purchase price of income producing real estate and capital assets;
· Other durable goods;
· Net losses from previous periods;
· Federal, state and local income taxes;
· Money set aside for retirement purposes;
· Other work related personal expenses (i.e., transportation to and from work); and depreciation.
To determine the disregard, deduct the allowable business expenses from the gross income (including capital gains).
· Self-employment income received less often than monthly which represents the assistance unit’s (AU’s) annual income is to be averaged over a 12-month period, even if the AU receives income from other sources.
· Self-employment income that is intended to meet the AU’s needs for only part of the year is to be averaged over the period of time the income is intended to cover.
For the period of time over which self-employment is averaged, the Human Services Specialist (HSS) shall add gross self-employment income (including capital gains), exclude the cost of producing the self-employment income, and divide the self-employment income by the number of months the income is to be averaged.
Room and Board Payments
Payments made to recipients for room and board are considered self-employment income.
Money deducted from an applicant/recipient’s wages as a result of garnishment is not allowed as deduction.
Reception and Placement (R&P) Cash/Voluntary Agency (VOLAG) funds may be considered resources or unearned income, depending on how they are disbursed.
· Funds given to the AU as a non-recurring (one-time) lump sum payment, or issued in more than one payment in the same month, are counted as a resource.
· Funds given to the AU in several payments in more than one calendar month are counted as unearned income in the month received, even if disbursed as vendor payments. The income shall be anticipated according to Quarterly Reporting/Prospective Budgeting regulations.