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State of Wisconsin |
HISTORY |
The policy on this page is from a previous version of the handbook.
4.6.7.1 Shelter and Utility Deduction Introduction
4.6.7.2 Allowable Shelter Expenses
4.6.7.3 Standard Utility Allowances
4.6.7.4 Shelter Deduction during a Temporary Absence
4.6.7.5 Shelter Deductions for Group Living Arrangement Residents
4.6.7.6 Shelter Deduction for Homeless Food Units
The shelter deduction is determined by the food unit’s reported monthly expense obligation for the current residence for shelter.
Deduct shelter and utility obligation amounts (not actual amount paid) which exceed 50% of the food unit's net income after all other deductions are made. If shelter and utility obligation amounts (not actual amount paid) are less than 50% of the food unit's income, do not allow a deduction.
The shelter and utility deduction cannot exceed the shelter maximum unless the food unit includes an elderly, blind, or disabled individual. Food units that include elderly, blind, or disabled individuals have no shelter cap.
Private payments and loans
Sometimes a relative or friend who is not a food unit member will pay the food unit's shelter directly to the provider or landlord on behalf of the food unit. In such cases, the IM worker should determine if the payment is a loan.
If the payment is a loan, it is excluded from income, and the expense is allowed in the shelter computation. If the payment is not a loan and a relative or friend makes the vendor payment, it must be excluded from income and the shelter expense is not allowed as a deduction. (4.3.4.3)
Shelter expenses that are deductible include:
Rent
Home mortgage and property taxes (if not in the mortgage). Homestead property may consist of multiple sections of land for tax purposes. Since the food unit is responsible for all taxes owed on the homestead property, the taxes owed on all sections of the property are allowed as a deduction.
Countable utility expenses
Mobile home lot rent and loan payments
Insurance on the structure (if not included in the mortgage). If a food unit has a homeowner's insurance policy that includes insurance on the structure and household contents, but the costs cannot be separately identified, the total cost is allowable. Note: renter’s insurance is not an allowable shelter deduction.
Second mortgage or home equity line of credit (regardless of what the mortgage is used for)
Special assessments.
Condominium fees or condo association fees.
Do not count as shelter or utility expenses such surcharges as pet expenses, extra garage rentals, or air conditioning surcharges. The monthly amount of rent should be taken into consideration each month when the shelter deduction is determined without regard to when the rent is actually paid. Only allow current monthly expenses. DO NOT include arrearages, late charges or discounts for early payment.
Disregard HUD and FMHA payments paid directly to the landlord or mortgage holder as an expense. Only include the amount the food unit owes after the HUD or FMHA payments as a rent expense.
Do not allow in-kind payments as a shelter deduction. This includes arrangements such as receiving free rent for providing child care, or other services. In these situations, no rent deduction is allowed, no income is counted and no child care deduction is allowed.
Include costs for the repair of damages to the food unit's home due to a natural disaster as a shelter expense. Examples of natural disasters are fires, floods, hurricanes, and tornadoes.
Do not count expenses for repairs that have been or will be reimbursed to the food unit by any private or public relief agency, insurance company, or any other source.
If anyone in the household shares the shelter cost with the food unit, create a separate shelter screen for each contributor, using the correct obligation amount for which each contributor is responsible.
When a self-employed person claims the total shelter costs as a business expense, do not allow any shelter deduction. If a he or she claims a percentage of the shelter costs as a business expense, the remaining percentage is a shelter deduction.
Food units that have received a WHEAP or LIHEAP payment greater than $20* in the current month or within the past 12 months will receive the HSUA. WHEAP or LIHEAP payments may be received at any address (in or out of state) in the current month or the past 12 months.
Food units that have not received WHEAP or LIHEAP will receive the appropriate utility standard based on the utility obligation(s) incurred by the food unit as described below:
Utility Standards
The Heating Standard Utility Allowance (HSUA), if obligated to pay, or actually paying for any heating source, including but not limited to gas, electric, wood, propane, etc.
The Limited Utility Allowance (LUA), if obligated to pay, or actually paying for two or more different types of non-heat qualifying utility expenses. The qualifying utility expenses are phone, water, sewer, electric, cooking fuel, or trash.
The Electric Utility Allowance (EUA), if obligated to pay, or actually paying for only a non-heat electric bill.
The Cooking Fuel Utility Allowance (FUA), if obligated to pay, or actually paying for only a fuel used for cooking that is not also used for a heating source.
The Water Utility Allowance (WUA), if obligated to pay, or actually paying for only a water bill, a sewer bill, septic tank installation or maintenance, or wastewater treatment bill.
The Phone Utility Allowance (PUA), if obligated to pay, or actually paying for only a telephone, including cellular phones.
The Trash Utility Allowance (TUA), if obligated to pay, or actually paying for only a trash or garbage bill.
If a food unit does not claim to have any utility obligation for the current residence and has not received a WHEAP payment, no utility allowance will be granted.
A heat expense is only allowed if the food unit is responsible for the obligation separate from his or her rent regardless of living in or out of subsidized housing.
See 8.1.3 Deductions for the current amount.
*Wisconsin’s WHEAP and LIHEAP payments are always greater than $20. IM workers will need to determine the payment amount from other states.
Special Situations
If a food unit reports a change in address, they are not required to report a change in utilities; the food unit may keep the utility standard applied to their food unit until their renewal. If, however, the food unit does report a change in utilities, enter the appropriate new shelter utility allowance. If WHEAP was received in the current or past 12 months; the food unit is entitled to the full HSUA regardless of current utility obligations.
When utility bills are not in a food unit member’s name, but the food unit claims responsibility for the bill and the address for the utility bill is the same as the food unit’s address, allow the appropriate utility standard. If separate food units share utility expenses and a residence, each food unit should be granted the full utility standard, regardless of which food unit receives the bill.
If a homeless food unit claims to have both temporary shelter and utility costs, the appropriate utility standard should be granted. If this is determined questionable, follow the verification policy below.
Self-employed food units who claim 100% of utility expenses as a business deduction on their tax forms are not entitled to a utility allowance. If less than 100% is claimed as a business deduction, the food unit is entitled to the appropriate utility allowance.
Verification
If a food unit claims to have received WHEAP, verification will be required; IM workers have access to this verification via the data exchange, Tran code: DXLI, in the CARES Mainframe. Note: All WHEAP payments are $30 or greater.
Note: If a household receives WHEAP, there will be no DXLI match if the payee is not a food unit member. The food unit is entitled to the HSUA.
For food units that have not received a WHEAP payment, verification of the food unit’s utility obligation(s) will be required only if determined questionable. If verification is requested and not submitted, the utility expense would not be considered when determining which utility allowance is appropriate for the food unit.
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Example 1: A food unit owns their home. If the applicant or member claims responsibility for all household utilities, including heat, verification should not be required as this is not questionable. |
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Example 2: A food unit claims to be responsible for paying heat in their apartment. The lease indicates heat is included in the rent. Because there is conflicting information, the utility expense claimed would be considered questionable. |
Allow shelter and utility expenses for a dwelling. The food unit is considered temporarily absent when the absence is caused by:
Employment or training away from home,
Illness, or
Abandonment due to a natural disaster or casualty loss.
Do not deduct shelter or utility expenses for the food unit if the unit has any of the following:
The food unit does not intend to return to the home; and
Any current occupants of the home receive FoodShare as a separate food unit and are being allowed the shelter and/or utility expense deductions; and
The food unit rents or leases the home to others during their absence.
Allow the appropriate utility allowance for a resident of a qualified group home if the utilities are identified separately. Residents of group living arrangements have no limit on the amount used as a shelter deduction because they are disabled. Allow shelter and medical deductions for room and medical costs that can be separately identified.
Sometimes room, meals, and medical costs cannot be identified separately. If the cost of room and meals are combined into one amount, the amount of the payment that exceeds the maximum allotment for a one-person FoodShare assistance group can be used as the shelter deduction.
If the amount paid for medical and shelter cost cannot be separately identified by the group home, no deduction is allowed for the cost.
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Example 1: Bev pays the CBRF Community Based Residential Facility $500 and receives shelter, meals, and medical care from the CBRF. Separate costs cannot be identified. Do not allow a deduction. |
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Example 2: Shirley is in a CBRF and her room and meal costs are combined into one amount of $600 per month. Separate costs cannot be identified. A one person allotment is $194 (effective October 1, 2015). $600 - $194 = $406. The shelter expense is $406. |
Homeless food units may be eligible for a shelter deduction using shelter expenses if they incur monthly expenses for shelter and a standard utility allowance (4.6.7.3) if they are responsible for utility expenses separate from shelter expenses or have received a LIHEAP payment in the previous 12 months.
Determine eligibility for shelter residents using only their income. Include only expenses they are responsible for. Count room payments to the shelter in the food unit's shelter expenses.
Do not include back payments on previously owed shelter expenses since the expenses were incurred before the budgeting period. The exception to this is vendor payments that must be repaid. Food units who have shelter expenses paid with a vendor payment can count the actual shelter costs if they repay the vendor payment.
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Example 3: A third party pays Gwen's shelter expenses while she is living in a homeless shelter during March. She agrees to pay the money back when she starts work. She is employed in April and moves. She incurs her March shelter costs in April since that is when she is expected to repay the third party. Her new shelter costs also are due in April. Include both March and April shelter costs for April. |
This page last updated in Release Number: 16-01
Release Date: 05/31/2016
Effective Date: 05/31/2016
Notice: The content within this manual is the sole responsibility of the State of Wisconsin's Department of Health Services (DHS). This site will link to sites outside of DHS where appropriate. DHS is in no way responsible for the content of sites outside of DHS.
Publication Number: P-16001