4.3.4 Unearned Income

4.3.4.1 Unearned Income Introduction

4.3.4.2 Counted Unearned Income

4.3.4.3 Disregarded Unearned Income

4.3.4.1 Unearned Income Introduction

7 CFRCode of Federal Regulations 273.9(b)(2)

Unearned income is income not gained by work or delivery of a service or product. Count all unearned income unless it must be disregarded. Some unearned income is disregarded because of source, type, or the reason for receiving it.

Count unearned income as income in the month that it is received, except when:

It isn't available to the FS group.
You're told otherwise by specific instructions in this Handbook.
When two payments from the same income source are received the same month due to mailing cycle adjustments, count each payment only for the month it is intended. Income sources commonly affected by such mailing cycle fluctuations include general assistance, other public assistance programs, SSISupplemental Security Income, and SSASocial Security Administration benefits.

Note: Occasionally, a regular periodic payment (e.g. title II,or VAVeterans Affairs benefits) is received in a month other than the month of normal receipt. As long as there is no intent to interrupt the regular payment schedule, consider the funds to be income in the normal month of receipt.

4.3.4.2 Counted Unearned Income

Tribal TANFTemporary Assistance for Needy Families payments
Interest, dividend, and royalty payments if available to a food unit member. Dividends which the household has the option of either receiving as income or reinvesting in a trust or other investment are to be considered as income in the month they become available to the household unless exempt under 4.3.4.3. Disregarded Unearned Income.
Annually paid annuities and lottery winnings. Average these payments over 12-months. Do not count the entire amount in the month received.
Net SSI payments

Gross Social Security payments less any repayments withheld due to previous overpayments of Social Security benefits. Include any Child Support payments withheld from Social Security payments. This will ensure that Child Support payments are correctly included in the total gross unearned income and correctly budgeted as a Child Support payment deduction.
Unemployment Insurance (Unemployment Compensation) payments, except for the $25 supplemental weekly Unemployment Compensation payment (stimulus payment) authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) for FoodShare. Disregard the stimulus payments effective 11-06-09.
Worker's Compensation benefits
VAVeterans Affairs disability and pension benefits, COLA and other adjustments made to the payments. The adjustments that are excluded are "Aid and Attendant Allowances” referenced in 4.3.4.3 Disregarded Unearned Income below.
Private disability payments
Caretaker Supplement for Children (CTS; C-SuppCaretaker Supplement for Children) payments
Child Support (CSChild Support) and maintenance payments made directly to the food unit, or passed through to the FS group by a CS agency, whether court ordered or voluntary. However, CS paid to a custodial parentA person's biological, step, or adoptive mother or father regardless of age. Parenthood doesn't have to be verified that resides with the non-custodial parent and the childA person's biological, step, or adopted son or daughter, regardless of age. If a child is adopted, the adoption severs the biological tie to the parent.(ren) for whom the CS is paid is not counted as income. Disregard CS payments received directly from an absent parent by a food unit if the money is turned over to the CS agency. Disregard CS payments retained by a CS agency.
Child Support and family Support must be prorated among the members covered by the court order. If a Family Support order includes the custodial parent, the income proration would also include that parent. Child support is prorated for only the children covered by the court order. Maintenance is budgeted for the person actually receiving it. The most up-to-date information about Child Support and Maintenance is auto populated on the CARESClient Assistance for Reemployment and Economic Support Worker Web Child Support screen.
W-2 payments received under W-2T, or CSJ, or as the custodial parent of an infant (CMC)
Kinship Care payments are unearned income of the child the payment is for
Any money received for sick or severance pay from an insurance policy, an income continuance policy, or disability payments from an employer that are not paid as accrued sick, vacation, or personal time. Gross income from these sources is budgeted. Whether or not the income is taxed or untaxed does not determine if the pay is counted as unearned or earned income.
Reimbursements for normal household living expenses such as rent, mortgage, personal clothing, and food eaten at home. These are counted because they are a gain or benefit. Include stipends that are part of a financial aid package and are intended as a reimbursement for living expenses.
Count a subsidized adoption payment, or adoption assistance payment as unearned income.
Tribal distribution payments. Income from tribal distributions should be prorated over the period it is intended to cover if it is predictable and regularly received. If the assistance group becomes ineligible and then reapplies before receiving their next installment, continue to use the same prorated amount as before.

Example 2: Dawn receives $500 quarterly from the Potawatomi Tribe. The frequency of the payment is regular and the amount is predictable. To calculate the monthly amount to be budgeted prospectively, prorate the amount over the time period intended:

$500/3 = $166.67 per month to be prospectively budgeted.

Money withdrawn or dividends that are or could be received from an otherwise exempt trust fund
Monetary gifts over $30 a calendar quarter. Calendar quarter: 3 consecutive months beginning with January, April, July or October.
Income from a land contract. Count any portion of monthly payments received that are considered interest from a land contract as unearned income. Do not count the principal as income, because it is the conversion of one asset form to another. If received less often than monthly, prorate it over the period between payments. Ignore it until s/he first receives it after becoming eligible.
Any money received from an installment contract must be:
1. Counted as income in the month received, or
1. Averaged over the number of months between payments. For example, average a quarterly payment received in January over January, February, and March. The FS group must choose one of the above methods. Document the choice in the case record.

If someone receives rental income and the property is managed more than 20 hours per week, see Self-Employment 4.3.3.4.

If someone manages the property for less than 20 hours a week, treat the income as unearned and budget as listed below. Include gross receipts minus allowable business expenses as earned income. Tax Forms 1040 C or 1040 E are used to determine rental income. If using Tax Form E, use recorded rental income plus the principal paid, to estimate future income. If the client has not completed a schedule C or E tax form, use the following method to calculate earned income.

1. When the owner is not an occupant, "net rent" is the total rent payment(s) received minus the total mortgage payment (principal and interest) and other verified operational costs such as (but not limited to) hazard insurance, mortgage insurance, and taxes.
2. When income is received from a multi-unit property and the owner lives in one of the units, compute "net rent" as follows:
  1. Add the total mortgage payment (principal and interest) and other verified operational costs such as (but not limited to) hazard insurance, mortgage insurance, and taxes common to the entire operation.
  2. Multiply the number of rental units by the total in step (i).
  3. Divide the result in (ii) by the total number of units, to get the proportionate share.
  4. Add the proportionate share to any operating costs paid that are unique to the rental unit. This equals total expenses.
  5. Subtract total expenses from total rent payments to get net rent.

Royalty income is unearned income received for granting the use of property owned or controlled. Examples are patents, copyrighted material or natural resources. Royalties often are a percentage of receipts from using the property or an amount for each unit produced.

Royalty and rental income

1. Royalty income is always unearned.
2. Rental income is earned only if the owner actively manages the property 20 hours or more per week. CARES will budget self-employment income from rental property as earned income if the property is self-managed 80 or more hours per month. If the monthly hours entered are less than 80, the income will be treated as unearned income even if the self-managed switch is "Y ".

Verify unearned rental income using available documentation. It is not necessary to collect serifs for unearned income.

4.3.4.3 Disregarded Unearned Income

Disregard the following income:

Housing and related income:

Disregard rent paid by the Department of Housing and Urban Development (HUDU.S. Department of Housing and Urban Development) and Farmer's Home Administration (FMHAFarmer's Home Administration) directly to a landlord as income. Do not include these payments as a deduction in the Shelter/Utilities Computation Unit. Only include as a rent expense what the household owes to the landlord after the HUD and FMHA payments.
Disregard rent paid by HUD to residents in the experimental housing program in Green Bay.
Disregard HUD and FMHA utility reimbursement payments made directly to a household or utility provider as income.
Disregard HUD utility reimbursement payments diverted by a Native American housing authority directly to the utility provider without permission, consent, or agreement of the FS group.
Under the Family Investment Centers program, HUD provides grant money to public housing agencies and Indian housing authorities. In turn, they provide access to education and job opportunities to public housing residents.
Disregard as income services provided to a public housing resident under a Family Investment Centers program. Services include:

Child care,
Employment and training counseling,
Literacy training,
Computer skills training,
Assistance in attaining certificates of high school equivalency, and
Other similar services.

Disregard free rent, no income is counted and no rent deduction is allowed.
A tenant may be billed utility expenses for common electrical devices, for the benefit of any number of tenants, but wired through his/her meter. A notice from the landlord identifies that cost and the tenant's reimbursement. Disregard the reimbursement.
Income received as a result of participation in the Fresh Start Program.

Employment Training and Education:

Educational aid for students is not counted as income.
Disregard educational expense reimbursements.
Disregard income produced by an educational trust that you excepted in the Asset Unit.

Loans:

Disregard as income any loan to the FS group. This includes loans from private individuals and commercial institutions. A legally executed document is not required to verify that income is a loan. A statement signed by both parties is enough to verify the income is a loan, if it contains: the amount of the loan; that the payment is a loan; and that repayment is required.

Medical and Dependent Care:

Disregard reimbursements for medical or dependent care. Some examples of medical or dependent care reimbursements that should be disregarded are:
1. Reimbursements from the MA Medical Assistance, also known as Medicaid or Title 19 Community Integration Program (CIP).
2. Reimbursements from the Alzheimer’s Family Caregiver Support Program (AFCSP) and National Family Caregiver Support Program (NFCSP).
Disregard dependent care payments as income for a group member's care when a county agency:
1. Pays a dependent care provider directly,
2. Reimburses the FS group after the group has incurred or paid a dependent care expense.
Disregard payments from the Wisconsin Family Support Program, which assists families by covering medical, dependent and other allowable expenses for in-home support for children with severe disabilities. Payments may be issued in several ways, including by voucher or direct payment to the vendor, or direct payment to the family as a reimbursement for allowable expenses. Do not confuse this program with "family support", a court ordered obligation that combines child support and maintenance.

SSA programs:

Disregard reimbursements for services provided by the Social Services Block Grant Program.
Disregard retroactive SSI payments which are paid in installments.
Retroactive SSI benefits which total 12 months or more of the Federal Benefit Rate (monthly SSI amount) will be paid in 3 or fewer installments at 6 month intervals. Each installment payments should be counted as an asset. Retroactive SSI benefits which equal or exceed 12 months of benefits, but which are owed to the following categories of recipients will continue to be received in one lump sum:

1. A person who has a medical impairment which is expected to cause death within 12 months.
2. A person who is ineligible for benefits and is likely to remain ineligible for the next 12 months.

Disregard income of an SSI recipient necessary to fulfill a Plan for Achieving Self Support (PASS) regardless of the source. This income may be spent in accordance with an approved PASS or deposited into a PASS account. The SSA must approve the individual's PASS in writing, identifying the amount of income that must be set aside each month to fulfill the PASS. It is the household's responsibility to report and verify that such income is necessary to fulfill its PASS in order for the income to be disregarded.
A qualified organization may collect a fee for acting as the representative payee for an SSI or OASDIOld Age, Survivor and Disability Insurance recipient. Disregard the amount withheld from the SSI or OASDI payment as income to the recipient. Reduce the SSI or OASDI amount by the amount withheld instead.

SSI-E

SSI-E income is disregarded income for FS. It is not necessary to determine if a SSI-E payment is being used for its intended purpose in order to disregard the income.

Energy Assistance Program

Disregard payments and allowances made by the Wisconsin's Home Energy Assistance Program ( WHEAP ).

Community Options Program

Disregard Community Options Program ( COP ) payments. But if a household member is receiving COP payments for providing services, count the money as earned income for providing the service.

Tribal / Native American Payments

Disregard all compensation including cash, stock, partnership interest, land, interest in land, and other benefits received from the Alaskan Native Claim Settlement Act.
Disregard up to $2000 per calendar year of income received by an individual Native American which is derived from land held in trust or in restricted status, when determining eligibility and benefit levels.
Disregard income from certain submarginal land of the US held in trust for certain Indian tribes (PL 94-114, Section 6).
Disregard payments to individual tribal members from these federal settlements:

1. Grand River Band, Ottawa Indians (PL 94-540).
2. Sac and Fox Indians claims agreement (PL 94-89).
3. Navajo and Hopi Tribe relocation payments (PL 93-531).
4. Confederated Tribes and Band of the Yakima Indian Nation & Apache Tribe of the Mescaler Reservation (PL 95-433).
5. Passamaquoddy Tribe, the Penobscot nation, and the Houlton Band of Maliseet (PL96-420), Maine Indian Claims Settlement Act of 1980.
6. Turtle Mountain Band of Chippewas, Arizona (PL 97-408).
7. Blackfeet & Gros Ventre tribes, Montana (PL 97-408).
8. Papago tribe, Arizona (PL 97-408).
9. Assiniboine Tribes of Fort Belknap Indian Community and Fort Peck Indian Reservation, Montana (PL 98-124).
10. Red Lake Band of Chippewas (PL 98-123).
11. Saginaw Chippewa Indian Tribe of Michigan (PL 99-346).
12. Chippewas of the Mississippi including these Minnesota Reservations: Mille Lac, White Earth, and Leech Lake (PL 99-377).
13. Chippewas of Lake Superior (PL 99-146, Dockets 18-C & 18-T). This includes the following Wisconsin reservations: Bad River, Lac du Flambeau, Lac Courte Oreilles, Sokaogon Chippewa Community, Red Cliff, and St. Croix.
14. White Earth Band of Chippewa in Minnesota (PL 99-264).
15. Michigan Keweenaw Bay Indian Community and Minnesota Fond du Lac, Grand Portage, Nett Lake, and White Earth reservations (Dockets 18-S, 18-U, 18-C, & 18-T).
16. Puyallup Tribe of Indians Settlement Act of 1989 (PL 101-41).
17. Catawba Indian tribe of South Carolina Land Payments Claims Settlement Act of 1993.
18. 1931 Indian Child Welfare (PL 95-608).
19. Seneca Nation Settlement Act of 1990.
20. Confederated Tribes of the Colville Reservation grand Coulee Dam Settlement Act.
21. Cherokee nation of Oklahoma Indians (Docket 262-83LO).
22. Cheyenne River Sioux Tribe.
23. Crow Creek Sioux Tribe.
24. Lower Brule Sioux Tribe.
25. Devil's Lake Sioux Tribe.
26. Oglala Sioux Tribe.
27. Rosebud Sioux Tribe.
28. Shoshone-Bannock Tribes.
29. Standing Rock Sioux Tribe.
30. Bois Forte Band of the Chippewa tribe under 25 USCS 1407 (PL 106-568).

Disregard the first $2,000 of individual shares for the following:

1. Old Age Assistance Claims Settlement Act (PL 98-500).
2. Yankton Sioux Tribe (Dockets 342-70 & 343-70).
3. Peoria Tribe of Oklahoma (Dockets 313, 314-A, & 314-B).
4. Maricopa Ak-Chin Indian Community (Dock 235).
5. Wichita and Affiliated Tribe (Keechi, Waco & Tawakonie) of Oklahoma (Dockets 371 & 372).
6. Ak-Chin, Salt River Pima-Maricopa and Gila River Pima-Maricopa Indian Communities (Docket 228).
7. Rincon Band of Mission Indians (Docket 80-A).
8. Walker Paiute Tribe (Docket 87-A).
9. Seminole Nation of Oklahoma, Seminole Tribe of Florida, Miccosukee Tribe of Indians of Florida and Seminole Indians of Florida (Dockets 73, 151, &73-A).

The Claims Resolution Act of 2010 (PL 111-291) Cobell v. Salazar Class Action Trust Case; Exclude all settlement proceeds received.

Child Nutrition Act of 1966 and the National School Lunch Act

Disregard the value of assistance received from programs under the Child Nutrition Act of 1966 and the national School Lunch Act. These are:

Special Milk Program.
School Breakfast Program.
Special Supplemental Food Program for Women, Infants and Children (WICWomen, Infant's, and Children Supplemental Food Program).
School Lunch Program.
Summer Food Service Program for Children.
Commodity Distribution Program.
Child and AdultA person who is 18 years old or older Care Food Program.

Disaster and Emergency Assistance Payments

Disregard major disaster and emergency assistance payments made by federal, state, county, and local agencies, and other disaster assistance organizations, including National Flood Insurance Program (NFIP).
Disregard Emergency Assistance (OPM) or emergency General Assistance when either is given to a migrantany person who temporarily leaves a principal place of residence outside of his state and comes to this state for not more than 10 months in a year to accept seasonal employment in the planting, cultivating, raising, harvesting, handling, drying, packing, packaging, processing, freezing, grading, or storing of any agricultural or horticultural commodity in its unmanufactured state or seasonal farm worker FS group if:
1. The payment is provided to a 3rd party (vendored) on behalf of the migrant or seasonal farm worker; and,
1. The FS group was in the job stream when it was provided.
Disregard disaster unemployment benefits to any individual that is unemployed as a result of a major disaster. Individuals cannot be eligible for any other unemployment compensation and also receive disaster unemployment benefits. Payments are limited to 26 weeks.

Veterans Benefits

Exclude VA aid and attendant and homebound allowances if:

The payment is for a past or future expense.
The payment is not in excess of the actual expense.
The payment is not for a normal household living expense.
The payment is used for the intended purpose.

Disregard aid and attendance and housebound allowances received by veterans, spouses of disabled veterans and surviving spouses.

GI bill

All military personnel fund the GI bill through mandatory payroll deductions in their first year of service. Disregard these deductions.

Combat Pay

Workers are now required to determine if a military allotment made available to an AG by an absent member deployed to a combat zone should be excluded when determining eligibility. Disregard any amount of combat zone pay that goes to the household that is in excess of the military person's pre-deployment pay. The exclusion lasts while the military person is deployed to the combat area.

If the amount of military pay from the deployed absent family member is equal to or less than the amount the household was receiving prior to deployment, all of the allotment would be counted as income to the household. Any portion of the military pay that exceeds the amount the household was receiving prior to deployment to a designated combat zone should be excluded when determining the household’s income for FS purposes.

Procedure

Follow these steps in determining how to budget combat zone pay:

Ask if the service member is deployed to a combat zone.
If the answer is no, verify military pay using a bank record or Leave and Earnings Statements (LES) and clearly document in case comments how income to the FS AG was determined and verified.
If the answer is yes, verify the service member’s pay before deployment to a combat zone and the amount they receive due to being assigned to a combat zone. Leave and Earnings Statements (LES) or bank records can be used to verify this amount.
Any portion that is more than the amount the unit was receiving immediately before deployment to a combat zone is exempt as combat pay.
Clearly document in case comments the combat pay source of verification and method used to determine amount to be disregarded and budgeted.

Note: Deployment to a combat zone can be established through a variety of methods including:

The deployed person’s military pay record, the Leave and Earnings statement (LES).
Orders issued to the military person in which the place of deployment is public record.
Contacting the Call Center which has a listing of designated combat zones, as well as a listing of pay items which may or may not be the result of deployment to a designated combat zone

Example 3: John, his wife Bonnie and their daughter have an open FS case. John is in the military stationed overseas, his monthly income is $1,000. John sends his wife $1,000 every month.

When John is deployed to a combat zone his pay is increased to $1,300 a month, which is deposited into a joint account. Because the $300 is combat pay, it is exempt income and not counted in the determination. The pre-combat pay of $1,000 is budgeted as unearned income for FS.

Example 4: Dori is in the military and receives $1000 per month in wages. Dori’s husband Louie and their son Joe have an open FS/MA case. Dori has her military pay directly deposited into a bank account in her name only; Louie has no access to the funds or to the account. Do not count any of Dori’s income in the eligibility determination for Louie and Joe.

Example 5: Ben is in the military. His paycheck is $1,000 a month. He has $500 directly deposited into his account and $500 directly deposited into a joint account with his wife, Andrea. The $500 directly deposited into the joint account is budgeted as unearned income in Andrea’s FS and/or MA determination. Since Andrea does not have access to Ben’s account, only the amount deposited in their joint account is counted.

Example 6: Tim is in the military making $1,200 a month. An allotment check of $1,000 is paid directly to his wife Karla, and $200 to himself. $1,000 is budgeted as Karla’s unearned income for her FS and/or MA determination.

Dottie Moore

Disregard as income any penalty payment paid as a result of the Dottie Moore lawsuit by DHSWisconsin's Department of Health Services. Until July 1, 2008, it was known as the Department of Health and Family Services. (formerly DHSS) to any AFDC applicant or recipient. These $50 to $200 penalty payments have been ordered by the US District Court for the Eastern District of Wisconsin in Civil Action No. 80-C-118.

Victims of Nazi Persecution

Disregard as income payments under PL 103-286 to victims of Nazi persecution.

Payments to Crime Victims

Disregard any payments received from a state established fund to aid victims of a crime.

Agent Orange Settlement Fund

Disregard payments received from the Agent Orange Settlement Fund or any other fund established in settling "In Re Agent Orange Product Liability Settlement Fund litigation MDL No. 381 (EDNY).

Wartime Relocation of Civilians

Disregard payments under PL 100-383 to US citizens of Japanese ancestry and permanent resident Japanese aliens or their survivors and Aleut residents of the Pribil of Islands and the Aleutian Islands West of Unimak Island.

Radiation Exposure Act

Disregard payments from any program under the Radiation Exposure Act (PL 101-426) paid to compensate injury or death resulting from exposure to radiation from nuclear testing ($50,000) and uranium mining ($100,000). Apply this disregard retroactively to 10-15-90. Continue the disregard as long as payments are identified separately.

Children of Vietnam Veterans Who Are Born With Spina Bifida

Disregard payments received under the provision of the Benefits for Children of Vietnam Veterans Who Are Born With Spina Bifida (PL 104-204). These payments are made to any child for a Vietnam veteran for any disability he or she experiences resulting from the spina bifida. Apply this disregard retroactively to 9-26-96. Continue this disregard as long as payments are identified separately.

Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970

Disregard reimbursements from the Uniform Relocation Assistance and Real Property Acquisition Policy Act of 1970 (PL 92-646, Section 216).

Capital Gains

Disregard capital gains from the sale of a personal asset as income. Profits gained from the sale of an asset continue to be counted as an asset. (See 4.3.3.3 for policy related to self employment)

Reverse Mortgage

Disregard reverse mortgage payments made to homeowners. Reverse mortgage payments are loans against the borrowers home and are considered an asset the month received and thereafter.

Payments to Filipino World War II Veterans

Disregard payments from the Filipino Veterans Equity Compensation Fund. The American Recovery and Reinvestment Act (ARRA) of 2009 created the fund for certain veterans and the spouses of veterans who served in the military of the Government of the Commonwealth of the Philippines during World War II. The compensation fund offers one time payments may be up to $15,000 to eligible persons.

Unemployment Insurance (Unemployment Compensation, or UCUnemployment Compensation ) Stimulus Payment

Effective 11-06-09

The $25 supplemental weekly Unemployment Compensation (UC) payment (stimulus payment) authorized by the American Recovery and Reinvestment Act of 2009 (ARRA) for FoodShare .

This page last updated in Release Number: 15-03

Release Date: 09/28/2015

Effective Date: 09/28/2015