Verification and Rent CalculationAngela Foster, PH Revitalization SpecialistClaunella Richardson, Financial AnalystChandra Broadnax, Program Analyst

U. S. Department of Housing and Urban DevelopmentDetroit HUD Field Office, Office of Public Housing

Willie C.H. Garrett, Public Housing Hub Director1Training OutlineLesson 1: Eligibility For Admission Notification LetterInterview ProcessRequired forms and documentsLesson 2: Verification ProcessDocument VerificationWhat is and is not Income?Methods of Income VerificationHow to access and use EIVLesson 3: Rent CalculationHow to calculate deductionsHow to calculate Rent

2BenefitsReduce rent underpayments and overpayments by residents.

Maximize HUDs limited housing resources.

The Dollar Impact of Rent ErrorsLesson 1: Eligibility For Admission

Lesson 1: ObjectivesTips to construct a clear and concise notification letter so the Family is not confused about what documents they must bring to the interview.Tips to construct a detailed Annual Income Checklist to reduce the risk of overlooking eligible income.Insight on how to conduct a respectful and productive interview with the Family to ensure all required documents are collected, the verification process is thoroughly explained, questions are answered and forms requiring signatures are signed.Review the purpose of HUD form 9886 and the Declaration Of Section 214 Status form to ensure the PHA has permission to use the Familys information for verification purposes and are eligible citizens.Tip: Add your own speaker notes here.5 Notification Letter

The Notification Letter commences the verification process. It should state the date, time, and location of the interview and a list of what documents the Family should bring. A clear and concise letter can reduce the time of the verification process and expedites housing the Family.Date:

Time:

Location:

What to bring:

The InterviewThe PHAs interview with the Family is the beginning and most important component of the verification process. It is where the PHA lays the groundwork to build trust with the Family, collect information, and explain the housing program requirements. The interview includes the review of documents and the signature and exchange of documents between the PHA and the Family.

*Give the family copies of what they sign.

7The Interview (cont.)The PHA must conduct the interview with dignity and respect. Establish an area to conduct interviews in private. Treat the Family with excellent customer service with a

Establish a partnership with the Family. The process to obtain Public Housing should not deplete the spirit of those who need our help. The PHA is not checking to see if the family is worthy, the PHA is verifying if the Family is eligible per HUD regulations. Be objective not judgmental!

Treat the Family the way you want to be treated

The Interview (cont.)During the interview, the use of interpersonal communication skills such as empathy, sympathy, effective listening and reflecting are essential. These skills help the PHA to communicate effectively with the Family. An effective interview reduces the risk of missing vital information needed to verify the Familys eligibility for housing assistance and alleviates the burden on the Family to making unnecessary trips back and forth to the PHA. This is especially challenging for Families that have to rely on others or unreliable public transportation.

The Interview (cont.)The PHA benefits from a well conducted interview. It lessens the time the PHA staff has to take to verify information and increases the time it takes the PHA to house a Family.

Documentation Check List

Social Security Card

Birth Certificate

Drivers License or Valid Government Issued IC

INS Documentation

Form HUD 9886Authorization for the Release of Information/Privacy Act Notice (cont.) Uses of Information to be Obtained: HUD is required to protect the income information it obtains in accordance with the Privacy Act of 1974, 5 U.S.C. 552a. HUD may disclose information (other than tax return information) for certain routine uses, such as to other government agencies for law enforcement purposes, to Federal agencies for employment suitability purposes and to HAs for the purpose of determining housing assistance. The HA is also required to protect the income information it obtains in accordance with any applicable State privacy law. HUD and HA employees may be subject to penalties for unauthorized disclosures or improper uses of the income information that is obtained based on the consent form. Private owners may not request or receive information authorized by this form. Form HUD 9886Authorization for the Release of Information/Privacy Act Notice (cont.)Who Must Sign the Consent Form: Each member of your household who is 18 years of age or older must sign the consent form. Additional signatures must be obtained from new adult members joining the household or whenever members of the household become 18 years of age.Form HUD 9886Authorization for the Release of Information/Privacy Act Notice (cont.)Failure to Sign Consent Form: Failure to sign the consent form may result in the denial of eligibility or termination of assisted housing benefits, or both. Denial of eligibility or termination of benefits is subject to the HAs grievance procedures and Section 8 informal hearing procedures. Annual Income ChecklistA detailed Annual Income Checklist reduces the risk of overlooking eligible income which could lead to under and over payments by residents.

TANF

Unemployment Benefits

Lesson 1: Wrap-upConstruct a comprehensive, clear and concise Notification Letter

Conduct a respectful and thorough Interview with Family

Collect required documents

Review with Family and sign Form HUD 9886

Review with Family and sign Declaration of Section 214 Status

Collect all Annual Income information.

16Lesson 2: Verification Process

Lesson 2: ObjectivesReview the purpose of Document Verification.

Review what is and is not Income.

Review the Methods of Income Verification. Learn how to access and use EIV Effectively

Tip: Add your own speaker notes here.18Verifying Social Security NumbersOne of the most important tools for identification is an applicants/participants Social Security Number. Prior to admission each Family member who has a Social Security Number and who is at least six years of age is required to disclose and verify that Social Security Number. New Family members at least six years of age must provide this verification prior to being added to the lease. This information must be provided for children in assisted households at the first regular reexamination after turning six. When a Family is adding a new baby to the lease, the PHA can help by providing Social Security Number application forms. Children on whose behalf welfare benefits are paid have social security numbers.

19Verifying Social Security Numbers (cont.)The best verification of the Social Security Number is the original Social Security card. If the card is not available, the PHA may accept letters from Social Security that establish and state the number. Documentation from other governmental agencies should also be accepted that establishes and states the number. A drivers license, military ID, passport, or other official document that establishes and states the number is also acceptable. The documents used to verify social security numbers should be copied and placed in the applicants file. Verifying Social Security Numbers (cont.)If applicants state that they do not have Social Security Numbers, the PHA should ask if the applicants have ever worked, had a bank account, received any government benefits or attended school in the United States. If applicants respond negatively to these questions and continue to state that they do not have a Social Security Number, they are required to sign a certification to this effect. An example of someone who might not have a social security number would be an eligible immigrant who is retired and living on a pension from their former country. The PHA may not require any individual who does not have a Social Security Number to obtain a Social Security Number. Most methods of verification require the Social Security Number, so the PHA should be familiar with how an applicant may obtain a Social Security Number locally.Verifying Social Security Numbers (cont.)If applicants indicate they have Social Security Numbers, but cannot readily verify them, the Family cannot be assisted until verification is provided. Applicants who have Social Security Numbers but refuse to provide them are not eligible for public housing.

Verifying Citizenship:Declaration of Section 214 StatusSection 214 of the Housing and Community Development Act of 1980, as amended, restricts HUD from making financial assistance available for noncitizens, unless they meet one of the categories of eligible immigration status specified in Section 214. Verifying CitizenshipFor noncitizens, the evidence consists of the signed declaration of eligible immigration status and one of the following:

Verifying CitizenshipAlien Registration Receipt CardArrival-Departure Record, with one of the following annotations: a.) Admitted as Refugee Pursuant to Section 207; b.) Section 208; c.) Asylum;d.) Section 243(h);Deportation stayed by Attorney General; or - Paroled Pursuant to Section 212(d)(5) of the INA. Verifying CitizenshipUnannotated Arrival-Departure Record, with one of the following: a.) Final court action granting asylum, if no appeal is taken;b.) Letter from INS asylum officer or district director granting asylum;c.) Court decision granting withholding of deportation; or - Letter from asylum officer granting withholding of deportation. Temporary Resident card, annotated: Section 245A or Section 210Employment Authorization Card, annotated Provision of Law 274a.12(11) or Provision of Law 274a.12Receipt issued by the INS indicating that the application for issuance of a replacement document in one of the above-listed categories has been made and the applicants entitlement to the document has been verified. Verifying CitizenshipBirth Certificates are acceptable forms of verification for Evidence of Citizenship.

The PHA verifies citizenship status through a birth certificate, however a U.S. passport, military identification card or DD-214 form are acceptable. Copies of all documents must be retained in the residents file.

What is Annual Income ?24 CFR 5.609Annual income is used both to determine income eligibility and is the first step in income-based rent calculation.

What is Income and how to Verify ItAll Income MUST be Verified!

The PHA is responsible for Verifying Income, NOT the Family!

24 CFR960.259(c)(i)(ii)(iii)(iv)

Asset Income - Amounts derived from assets to which any member of the family has access. Any withdrawal of cash or assets from an investment. If the family has net family assets in excess of $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current national passbook savings rate, as determined by HUD.Verify the following information 3rd Party Verification Methods:Bank StatementsInvestment StatementsIRS recordsSell of Property documents (homes, stocks, boats)Property acquisition records

What is Income and how to Verify It

What is Income and how to Verify It (cont.)Asset Income

NOTE: The public housing program does not have a dollar limit on the amount of assets a family can possess and still be eligible for the program, but the income produced by net family assets is counted as part of Annual Income.

What is Income and how to Verify It (cont.)Employment Income that includes all wages, salaries, overtime pay, commissions, fees, tips, bonuses.Verify the following information through EIV and 3rd Party Verification Methods: Start date

Termination date

Pay frequency

Pay rate

Anticipated pay increases

Year-to-date earnings

Bonuses

Severance pay

Overtime

What is Income and how to Verify It (cont.)

Self-Employment Income from the operation of a business or profession.

Verify the following information through EIV and 3rd Party Verification Methods: Net income (gross income expenses)Withdrawal of cash or assets except to the extent it is a reimbursement of cash or assets invested by the familyExpenditures for business expansion or amortization of capital indebtedness which are not deducted from the gross income.Allowance for depreciation of assets used in business or profession based on straight line depreciation.

Social security payments, TANF, Unemployment, and Pension Benefits

Verify the following information through EIV and 3rd Party Verification Methods if there are discrepancies:

Social Security and SSI Verify through EIVUnemployment Verify through EIVTANF Verify through EIVPensions Verify through EIV or 3rd party verification methods

What is Income and how to Verify It (cont.) Child support

Verify the following information: Verify Child Support through 3rd party verification methods; information is not available in EIV.

Verify if the family is actually receiving Child Support before counting the court ordered amount.Verify how much the family is receiving. To avoid overpayment by the family, do not count the court ordered amount if it is not the amount received by the family.

What is Income and how to Verify It (cont.)

Use 3rd Party Verification Methods to Verify Income Below

Annuity payments, Insurance policies.Private Retirement funds, disability or death benefits. Periodic receipts.All regular and special pay of a member of the Armed Forces, (except for hostile fire pay, which is excluded) Regular contributions and gifts.

Note: Of all the forms of income that should be included in Annual Income, contributions from sources outside the household is the most often missed.

What is Income and how to Verify It (cont.)

What is Not Annual Income? 24 CFR 5.609(c)a. Income from employment of children (including foster children) under the age of 18 years.

b. Payments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the tenant family, who are unable to live alone).

c. Lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and workers compensation), capital gains and settlement for personal or property losses.What is Not Annual Income? (24 CFR 5.609(c)d. Amounts received by the family that is specifically for, or in reimbursement of, the cost of medical expenses for any family member.

e. Income of a live-in aide.

f. The full amount of student financial assistance paid directly to the student or to the educational institution

What is Not Annual Income? (24 CFR 5.609(c)g. The special pay to a family member serving in the Armed Forces who is exposed to hostile fire.h. Amounts received under training programs funded by HUD. Amounts received under a resident service stipend. A resident service stipend is a modest amount (not to exceed $200 per month) received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development. Such services may include, but are not limited to, fire patrol, hall monitoring, lawn maintenance, resident initiatives coordination, and serving as a member of the PHAs governing Board. No resident may receive more than one such stipend during the same period of time.What is Not Annual Income? (24 CFR 5.609(c)Incremental earnings and benefits resulting to any family member from participation in qualifying State or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff. Amounts excluded by this provision must be received under employment training programs with clearly defined goals and objectives, and are excluded only for the period during which the family member participates in the employment-training program. What is Not Annual Income? (24 CFR 5.609(c)i. Temporary, nonrecurring, or sporadic income (including gifts); The key element that causes the exclusion of this income is that it is neither reliable nor periodic. j. Reparation payments paid by a foreign government pursuant to claims filed under the laws of that government by persons who were persecuted during the Nazi era.

k. Earnings in excess of $480 for each full-time student 18 years of age or older (excluding the head of household and spouse);

What is Not Annual Income? (24 CFR 5.609(c)m. Adoption assistance payments in excess of $480 per adopted child.

n. Deferred periodic amounts from Supplemental Security Income and Social Security benefits that are received in a lump sum amount or in prospective monthly amounts; a lump sum payment covering the period from application to determination of eligibility.

o. Amounts received by the family in the form of refunds or rebates under State or local law for property taxes paid on the dwelling unit; This exclusion would apply to State homestead exemptions, for example.

What is Not Annual Income?(24 CFR 5.609(c)p. Amounts paid by a State agency to a family with a member who has a developmental disability and is living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home; the State funds alluded to in this paragraph are paid to prevent the institutionalization of a family member.

q. Amounts specifically excluded by any other Federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in the above list of excluded income apply. What is Not Annual Income?(24 CFR 5.609(c)The following list of benefits is excluded income: The value of the allotment provided to an eligible household for coupons under the Food Stamp Act of 1977 [7 USC 2017 (h)].Amounts of scholarships funded under Title IV of the Higher Education Act of 1965 including awards under the Federal work-study program or under the Bureau of Indian Affairs student assistance programs [20 USC 1087 (uu)]. Examples of Title IV programs include but are not limited to: Basic Educational Opportunity Grants (Pell Grants).Supplemental Opportunity Grants.State Student Incentive Grants.College Work Study.Byrd Scholarships.Methods of Income VerificationWritten Third Party Verification: Independent verification of income and/or expenses by contacting the individual income/expense source(s) supplied by the family. The verification documents must be supplied directly to the independent source by the PHA and be returned directly to the PHA from the independent source. Oral Third Party Verification: Independent verification of income and/or expenses by contacting the individual income/expense source(s) supplied by the family, via telephone or in-person visit. PHA staff should document in the tenant file, the date and time of the telephone call, the name of the person contacted and telephone number, along with the confirmed verified information. This verification method is commonly used in the event that the independent source does not respond to the PHAs faxed, mailed, or e-mailed request for information in a reasonable time frame, i.e., ten (10) business days.Methods of Income Verification3. Document Review: The PHA reviews original documents provided by the tenant in support of their declaration of income during the income reexamination. This verification method can only be used as the sole source of income verification when third party verification cannot be obtained. When the PHA resorts to reviewing tenant-provided documents, the PHA must document in the tenant file why third party verification was not available. Methods of Income VerificationAcceptable Participant-Provided Documents Housing program participants have an obligation to the PHA to provide any letter or other notice, including any letter or notice from HUD that provides information concerning the amount or verification of family income, per section 3(f) of the U.S. Housing Act of 1937, as amended. In support of the tenants declaration of income, the PHA may review original (authentic) documents provided by the participant. All documents should be dated within the last 60 days of the interview. The PHA should make a photocopy of the original document(s) and maintain the copy in the participant case file. The PHA should also document in the tenant file, the receipt, copy, and review of the original (authentic) document. Methods of Income VerificationConsecutive and original pay stubs

Social Security Administration award letter

Bank statements

Pension benefit statements

Temporary Assistance to Needy Families (TANF) award letter

Other official and authentic documents from a Federal, State, or local agency.

Summary of some acceptable participant-provided documentsMethods of Income Verification4. Tenant Certification: The tenant submits an affidavit or notarized statement of reported income and/or expenses. This verification method should be used as a last resort when all other verification methods are not possible. When the PHA relies on tenant certification, the PHA must document in the tenant file why third party verification was not available.

Methods of Income Verification at a GlanceVerification TypeVerification Level of ImportanceEIVMandatory and highest level of third party verificationWritten 3rd Party High (Mandatory if EIV income verification is not available or if EIV data differs substantially from tenant-reported informationOral 3rd PartyMedium (Mandatory if Written 3rd party verification is not availableDocument ReviewMedium-Low (Use on provisional basis)Resident Declaration (Signed affidavit) Low ( Use as a last resort)PHAs must review EIV and maintain the data it provides How to Access and Use EIV at a glanceHow does data get into EIV?If a record has a fatal error, it will not make it to EIV.If the weekly summarization fails, updated data can be delayed in EIV.If your PHA fails to report adverse information in EIV, an unqualified applicant could receive assistance.Matching Process and Verification begins (for Action Type1) and occurs at each subsequent 50058 submissionHow to Access and Use EIV at a glanceUser must view Security AwarenessTrainingMust access Secure Systems every 60 daysHow do I access EIV?How to Access and Use EIV at a glancePer PIH 2010 - 19

The New HUD Regulation24 CFR 5.233. Effective January 31, 2010, all PHAs are required to use the EIV system in its entirety. This means that PHAs must use all features of the EIV system How to Access and Use EIV at a glancePer PIH 2010 - 19

Verify tenant employment and income information during mandatory reexaminations of family composition and income in accordance with 24 CFR 5.236, and HUD administrative guidance; andReduce administrative and subsidy payment errors in accordance with HUD administrative guidance.How to comply with 24 CFR 5.233?

What is the frequency required?What is mandated use?If a user at your PHA has not used the EIV system within the last 6 months as required , you will receive a notice of NON-COMPLIANCE.Accessing detail income reports for all families subject to an annual/interim & accessing the reportsHow to Access and Use EIV at a glanceEIV REPORTS YOU MUST USE:MonthlyDeceased Tenants ReportIdentity Verification ReportImmigration ReportQuarterlyExisting Tenant SearchMultiple Subsidy ReportNew Hires Report - (only those PHAs with an interim increase reexamination policy)

How to Access and Use EIV at a glanceWhat if the tenant does not provide the PHA with requested information?If you fail to receive verification through the allowable means:The PHA may determine that the tenant is not in compliance with program requirements and terminate tenancy or assistance, or both, if the tenant fails to provide the requested information in a timely manner (as prescribed by the PHA).A PHAs ACOP or EIV Policy should account for allowable timely response thresholds

What if an EIV report reveals an income source that was not reported by the tenant or a *substantial difference in the reported income information?The PHA is required to determine the retroactive rent as far back as the existence of complete file documentation (form HUD-50058 and supporting documentation) to support such retroactive rent determinations*Substantial Difference is defined as >=$2,400 annuallySide Note: The tenant must be provided an opportunity to contest the PHAs determination of tenant rent underpayment.

How to Access and Use EIV at a glance

Maintain accurate files and utilize the guidance HUD provides

Helpful EIV TipsYou must maintain copied EIV information under lock and keyRun reports/print reports regularlyReport technical issues to EIV Coordinator & issues and Keep track of open ticketsBe proactive. If you are having issues with EIV or with a particular tenants data, contact EIV Coordinator immediatelyReview EIV Roundtable Notes & Always join in on EIV Roundtable conference calls

Lesson 2: Wrap-upVerify Documents to determine family eligibility.

Know what is and is not income per: (24 CFR 5.609) and 24 CFR 5.609(c) respectively.

The use of EIV is mandatory.

Income Verification should take no longer than 10 days by following the Methods of Income Verification.

60Lesson 2: Wrap-upFollow instruction provided when you receive notices from EIV regarding resolving Debts Owed, Multiple Subsidy, & Deceased Tenants cases

Run reports/print reports regularly

Report technical issues to EIV Coordinator & issues and Keep track of open tickets

Review EIV Roundtable Notes & Always join in on EIV Roundtable conference calls

Lesson 3: Rent Calculation

Lesson 3: ObjectivesLearn how calculate deductions to ensure the accuracy of adjusted annual income.

Learn how to calculate rent to reduce the risk of overpayments and underpayments by residents.Tip: Add your own speaker notes here.63DEDUCTIONS Adjusted Income is:Annual Income, minus$480 per Dependent Deduction, minus$400 Elderly/Disabled Deduction, minusUnreimbursed medical expenses for elderly/disabled family beyond 3% threshold, minusUnreimbursed reasonable attendant care and auxiliary apparatus expenses for family member with disabilities to the extent necessary to allow family member to be employed, not to exceed earned income, beyond 3% threshold, minusReasonable childcare expenses which enable family member to work or pursue education, minusPH Permissible Deductions, minus EID Dependent DeductionThe Dependent deduction is Statutory per (24 CFR 5.611). The amount is $480, and is deducted from Annual Income.

This $480 annual deduction is available for a member of the family (except live-in aides, foster children and foster adults who may be household members but are not family members) other than the family head or spouse, who is under 18 years of age, is a person with a disability, or is a full-time student. NOTE: There is no maximum age limit for who may qualify as a full-time student.

Dependent Deduction

How is it calculated?Number of dependents X $480

VerificationMinor family memberdocumentation demonstrating family member is a minor

Disabled family memberdocumentation demonstrating family member is disabled

Full-time studentcurrent enrollment status letterElderly and Disabled Family DeductionThe Elderly and Disabled Family Deduction is Statutory per (24 CFR 5.611). This $400 annual deduction is available to families whose head of household, their spouse, or a sole member who is at least 62 years of age (elderly families), or a person with a disability (disabled families). This may also include two or more such persons living together, or two or more such persons living with a live-in aide. Each Elderly or Disabled Family is limited to one $400 deduction regardless of the number of elderly or disabled household members.Elderly and Disabled Family DeductionHow is it calculated?Eligible Family X $400

VerificationEIVDisability verification form completed by medical professionalBirth CertificateChild Care DeductionThe Child Care Deduction is Statutory per (24 CFR 5.611).

Childcare expenses are defined as the unreimbursed amounts anticipated to be paid by the family for the care of children less than 13 years of age during the period for which annual income is computed (24 CFR 5.603).

Such amounts are deductible from annual income only when the care is necessary to enable a family member to actively seek employment, be gainfully employed, or to further his or her education.

Family may not be denied solely because a family member could take care of the children.

Child Care Deduction (cont.)The amount deducted must reflect reasonable charges for childcare. In the case of childcare necessary to permit employment, the amount deducted may not exceed the amount of employment income that is included in annual income. The PHA is charged with determining what is a reasonable amount, especially when the care is provided to further a family members education. Unlike the employment related portion of the deduction, childcare costs for education purposes are not capped by the amount earned. Surveying the cost of childcare in the community is a good method to determine when the PHA should cap the deduction.Child Care Deduction (cont.)Verification

Actively seeking employmentverify with W-2/Welfare to Work program; resident provided statement

EmployedWage incomePursue educationenrollment verificationDisability Expense DeductionThis deduction covers unreimbursed costs for attendant care or auxiliary apparatus for a disabled family member. The deduction must be applied as follows: The reasonable attendant and auxiliary apparatus expenses must enable an adult member of the family to be employed (including the person with disabilities).

The deduction may not exceed the earned income received by adult family members who are able to work because of the care or auxiliary apparatus. Calculating Medical/Disability Expense DeductionThe 3% threshold amount must only be counted once in considering medical/disability expense deductions

*Disability assistance deductions must be calculated before medical deductions since it is limited by the amount a person works Unreimbursed Medical Expense DeductionsThis deduction is granted only to elderly or disabled families.

A range of unreimbursed medical expenses and services can be claimed, including, but not limited to the following, to the extent that the total medical expenses exceed 3 percent of annual income (the PHA must put definition in its ACOP. Use of IRS Medical Expenses, found in IRS publication 502, as guidance is acceptable):

The 3 Percent Deductible forDisability and Medical Deductions

When only one deduction is present, the 3% is applied to that deduction.

Example: Medical only Elderly family with no dependents. Annual Income = $15,500;3% of A.I. = $ 465Anticipated medical costs = $400$400 is less than $465, so this family receives no medical deduction. Note: The family would receive the $400 deduction for being an elderly household.

The 3 Percent Deductible forDisability and Medical DeductionsExample: Attendant care/apparatus only Single person with a disability, no dependents.This family receives a deduction of $1,935 for the assistive animal ($2,400 - $465). In addition the family will also receive the $400 deduction for being a household headed by a person with a disability. Annual Income = $15,5003 Percent of A.I. =$465Assistive animal care costs =$2,400 $2,400 is greater than 3% of Annual Income, subtract $465 Deduction = $1,935

The 3 Percent Deductible forDisability and Medical DeductionsExample: The 3 Percent Deductible with Both Unreimbursed Medical and Disability Expense Deductions

Families with a head or spouse who is elderly or a person with a disability may (potentially) receive both the unreimbursed medical and disability expense deductions.

Families with a member, other than the head or spouse, who is a person with a disability may only qualify for the disability expense deduction.The 3 Percent Deductible forDisability and Medical DeductionsExample (cont.):Head of household is a senior with a disability who works part time. Annual Income = $15,500Income from employment =$ 6,600 Anticipated medical costs =$400Assistive animal care costs =$3,000Total Medical and Disability costs=$3,400Total allowed deduction =$2,935 ($3,400 -$465)Permissive DeductionsPermissive Deductions (see 24 CFR 5.611) are defined as additional, optional deductions that may be applied to annual income. If the PHA opts to use permissive deductions, it must have a written policy guiding their administration, and the deductions must be applied consistently.

Permissive Deductions (cont.)PHAs considering the use of permissive deductions should apply the following considerations when developing a new deduction:

Permissive deductions must be included in the PHAs ACOP and granted to all families that qualify for them.

Permissive deductions should fill in or complement existing income exclusions and deductions.

Permissive (and mandatory) deductions can be thought of in two ways: 1. deductions based on need or family circumstance and 2. deductions designed to encourage self-sufficiency or other economic purpose.Asset IncomeIf the family has an asset which they can access, the annual dollar amount is counted whether they receive the interest/dividends or notAsset income is based on what the family receives on the investment, not on what they put inIf the cash value of the investments is greater than $5,000, either the actual income derived or 2% (passbook rate) will be counted, whichever is greater PHAs must determine the cash value of assets in some cases since this may affect their rent calculation. The cash value is equal to the market value minus the expense to convert the asset to cash:Cash Value=Market Value- Expenses Business IncomeThe net income from the operation of a business or profession. Expenditures for business expansion or amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line decline, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.Welfare Income / TANF (24 CFR 5.609)Welfare assistance (TANF). If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of: - the amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities, plus - the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the familys welfare assistance is radically reduced from the standard of need by applying a percentage, the amount calculated shall be the amount resulting from one application of the percentage.

Note Food Stamps are excluded from Annual Income.Welfare Income / TANFHow is it calculated? Monthly Cash Assistance Amount x 12 minus the amount of Food Stamps

Example: The family receives $700 per month cash assistance and $400 per month food stamps.

$700 x12 =$8400 annual cash assistance amount$400 x 12 = $4800 annual food stamps amount8400 + 4800 (4800 food stamp exclusion) = $8400$8400 = Annual Welfare/TANF Income

Wages CalculationHow is it calculated?

1. Average the number of hours worker per year Example: 40 hr. work week = 2080 per year40 hrs. x 52 weeks (the number of weeks in a year = 2080 hrs. yr.)Example: 32 hr. work week = 1664 per year32 hrs. x 52 weeks (the number of weeks in a year = 1664 hrs. yr.)2. Hourly rate x hrs. per year$7.00 x 2080 = $14560 = Annual employment income based on 40 per yr.

Social Security, Social Security Supplemental Income CalculationHow is it calculated?Monthly Amount x 12

Family receives SS benefits $500 per mo.Family receives SSI benefits $250 per mo.Family receives State of Michigan SSI quarterly (receives 4 times per year) $69$500 x 12 = $6,000$250 x 12 = $3,000$69 x 4 = $276Total Annual Income = $9,276Lesson 3: Wrap-up Calculate ALL verified Deductions before rent is calculated to obtain Adjusted Annual Income.

QA/QC deduction calculations before rent is calculated.

Calculate Rent using all verified income and verified Deductions

QA/QC Rent calculations and provide family with a rent choice: Flat Rent or 30% of Monthly Adjusted Income.

87 Summary of TrainingConstruct a comprehensive notification letter in lay terms that tells the family the date and time of the Interview and what documents they must bring.

Conduct a respectful and thorough Interview to ensure no information is missed and trust is built with the family.

The PHA is responsible for Verifying Income, NOT the Family!24 CFR960.259(c)(i)(ii)(iii)(iv)

88

Summary of Training (cont.)

Take no longer than 10 days to Verify Income by using the MANDATORY EIV system and the Methods of Verification Hierarchy Chart.

Calculate Deductions and QA/QC the process.

Calculate Rent, QA/QC the process and provide the family with a rent choice and give them a copy of the signed choice form.

HUDs Public Housing Occupancy GuidebookCode of Federal Regulation (CFR)ACOP Admission and Continued Occupancy Policy24 CFR 5.609 States what is Annual Income24 CFR 5.609(c) States what is NOT Annual Income24 CFR Part 960 Admission to, and Occupancy of Public Housing24 CFR Part 966 Public Housing Leasing and Grievance ProceduresElectronic Code of Federal Regulation for HUD http://www.ecfr.gov/cgi-bin/textidx?SID=be81e73214ab2ae15d297c24bde62391&tpl=/ecfrbrowse/Title24/24tab_02.tpl

Helpful Hint: Using HUDs Public Housing Occupancy Guidebook is a Safety Net because all of its content is per HUDs RegulationsResources