2361 Verification of Earned Income

Verification of earnings from employment will be by check stubs, pay slips, or collateral contact with the employer. Sufficient verification must be obtained so that the actual income of the employee can be determined. The worker should not automatically assume that one check stub accurately reflects earnings for an entire month. The latest two months verification will be required so that an average monthly earnings amount can be determined. If a person is paid weekly, then the latest 8 consecutive check stubs will be required. If the person is paid every other week or twice a month, then the latest 4 check stubs will be required, and if paid monthly, then the latest 2 check stubs will be required. If the client does not have the required verification, then verification from the employer will be required.

Exception: For cases in which the individual has recently started employment and two months verification is not available, the Service Representative will compute the income from the best information available. Verification of all, if any, paychecks already received by the individual should be obtained and/or an employer's statement of anticipated earnings (e.g., hourly wage, number of hours expected to work/week, etc.).

Verification of earnings from self-employment will be by Federal Income Tax Return, purchase, sales, and account books or by any other source which establishes the source and amount of income. As soon as an individual is known to be engaged in a farming, business, or other self-employment enterprise, he will be advised of the necessity of keeping accurate records so that his income can be determined.

Verification of in-kind earned income (e.g. free rent, groceries, etc.) will be obtained from the employer. The verification must include the value of the in-kind benefit (e.g. the rent amount the client would otherwise pay, the cost of groceries provided, etc.) and how often it is provided (e.g., monthly, weekly, etc.). If the amount fluctuates from week to week or month to month, then verification of the in-kind earned income paid during the last 2 months should be obtained.

2362 Computation of Monthly Gross Earned Income

2362.1 Computation of Earnings Received as an Employee

The gross earned income amount which must be included in the AFDC budget is an estimate of the amount which the individual can reasonably be expected to have available in the next month(s). The estimate of monthly earnings is usually based on the assumption that the earnings received in the most recent months are reflective of the earnings which will be received in the current and following months. However, in some situations, this assumption will not hold true. Therefore, the estimate of monthly earnings must be based on the latest information which is available at the time the client is interviewed, or at the time verification of earnings is requested in writing.

In most situations, the estimate will be an average of the latest two months' gross earnings. In situations, though, in which the client started employment within the last two months, or in which a change (e.g., pay raise, change in number of hours worked, etc.) has occurred within the last two months, another method which more accurately reflects the current earnings will be used (See the discussion and examples below).

The first step in computing monthly gross earned income of an employee is to determine the average gross pay per pay period. Any advance EIC payments paid to the employee with his regular earnings will be excluded. The average gross monthly earnings are then determined by multiplying the average pay per pay period by the appropriate multiplier for the pay frequency (e.g., weekly, bi-weekly, etc.). The chart below shows for each pay frequency the number of pay periods which should be averaged, and the appropriate multiplier for determining gross monthly earnings.

* Last consecutive pay periods for which the client has been paid as of the date the client is interviewed or the written request for earnings verification is made.

** If the employee is paid more frequently than weekly (e.g., daily), the worker will determine the monthly gross for each of the two latest calendar months by adding all the pay checks received in each month. The two monthly amounts will then be averaged to arrive at the gross amount to be included in the AFDC budget.

In some situations, the above method of obtaining an average pay per pay period cannot be used because the client has not yet worked a full two months, or a change has occurred within the past two months which has affected current earnings. In these situations, another method which will give a more accurate reflection of the client's earnings will be used to obtain an average pay per pay period. The following describes some methods for the typical types of these situations. However, it is understood that, depending upon the individual situation, another method may be more appropriate to use.

Therefore, the Service Representative should carefully consider the method to be used to ensure that it will give the most accurate reflection of the client's monthly earnings.

1. Employment Started Within Past Two Months

1. Only One Full Paycheck or No Paychecks Received - A statement from the client's employer should be obtained. The statement should show what the employer expects the client to earn each pay period, or provide enough information so that the worker can determine the expected earnings (e.g., number of hours expected to work per week, hourly wage, etc.). If the client has already received one paycheck and provides verification of it, it may be used in conjunction with the employer's statement. However, it should not be assumed that the first paycheck accurately reflects the amount which the client will earn on an on-going basis. Therefore, an employer's statement should be obtained and used to determine the monthly gross earnings.


EXAMPLE: Ms. Smith reports on May 22 that she started working on May 14. She received one paycheck on May 18 for three days of work. The checkstub shows she worked 15 hours at $4.00/hour. An employer's statement is obtained which shows she is expected to work 25 hours per week at $4.00/hour and will be paid weekly. Her gross monthly earnings are computed, based on the employer's statement, as follows: $4.00 (hourly wage) X 25 (number of hours expected to work per week) = $100/week X 4.334 = $433.40.

If the client has received two paychecks but only one of those was for a full pay period, an employer's statement should still be obtained to verify whether the one full paycheck is reflective of what the client is expected to earn on an on-going basis.

2. At Least Two Full Paychecks Received - Verification of all paychecks received will be obtained and an average of these checks will be determined. If the first check received did not reflect a full pay period's earnings, then it will be excluded when averaging the checks.

EXAMPLE: Ms. Jones has received five paychecks since she started working part-time on May 31. She provides all five checkstubs. The stub for her first check, which was for the pay period ending June 1, shows earnings for eight hours at $3.80/hour. Since this first check was for only two days of work (4 hours/day), it will be excluded when determining the weekly average. The other four checkstubs are averaged to arrive at a weekly pay period average of $77.90 X 4.334 = $337.62 gross monthly earnings.

2. Change Occurred Within Past Two Months

For purposes of this section, a "change" in the earnings amount does not include changes due to normal fluctuations in the number of hours worked or amount paid, or short-term temporary changes such as working an extra shift one week because another employee was sick. It does include changes in hourly wage, moving from part-time to full-time status or vice versa, obtaining or losing a second job, etc.

1. Change in Hourly Wage - The new hourly wage will be verified either by checkstub or employer's statement. If the number of hours the client is working has not changed, then an average of the last two months' hours worked per pay period should be determined. The average hours worked will then be multiplied by the new hourly wage.

EXAMPLE: Ms. Doe received a raise from $4.00/hour to $4.25/hour on her March 16 paycheck. She continues to work the same number of hours. She is paid bi-weekly so the last four consecutive check stubs are used to determine an average number of hours worked per pay period. Her gross monthly earnings are then computed as follows: $4.25 (new hourly wage) X 30 (average number of hours) = $127.50 (bi-weekly earnings) X 2.167 = $276.29.

2. Change in Number of Hours - The new number of hours expected to work should be verified with the employer and then multiplied by the hourly wage to arrive at the pay per pay period.

EXAMPLE: Ms. Wilson had been working on an "as needed" basis and had been averaging 10 hours/week. On April 24, she was put on regular employee status and her employer expects her to work about 30 hours/week. Her hourly wage remained the same at $4.50/hour. Her gross monthly earnings are computed as follows: $4.50 (hourly wage) X 30 (new number of hours expected to work) = $135 (weekly earnings) X 4.334 = $585.09.

3. Client Obtained a Second Job - The monthly earnings from each job should be computed separately and then added together for the total monthly gross. Whichever method will give the most accurate reflection of each job's earnings should be used for each job (e.g., average of last two months' earnings for first job and estimate based on employer's statement for second job).

EXAMPLE: Ms. Jones has been working part-time for one employer for several years. In July, she begins another part-time job in addition to the first job. An average of her last eight consecutive paychecks from the first job is determined and multiplied by 4.334 for gross monthly earnings of $325.05. A statement from the second employer is obtained which shows Ms. Jones is expected to work 15 hours per week at $4.25/hour. Based on this information, her gross monthly earnings from the second job are computed to be $276.29. The monthly earnings from the two jobs are then added together for a total gross monthly earnings of $601.34.

As stated earlier in this section, none of the methods described above may give the most accurate reflection of monthly earnings whereas another method would depending upon the individual situation. In that situation, the worker should use whatever method does give the most accurate reflection of earnings and document the case record carefully to explain on what basis the earnings were computed and why this was considered the most accurate reflection of the earnings.

Form EMS-7, Summary of Last Case Action, will be used to document the earnings computation for all cases, regardless of which method is used to compute gross monthly earnings.

2362.2 Computation of Earnings From Self-Employment

Like employee earnings, the monthly amount of self-employment earnings which must be included in the AFDC budget is the agency's best estimate of earned income which will be available to the individual in a month or months. However, self-employment earnings are usually not as predictable as employee earnings and are often received less frequently than monthly. Therefore, in most situations, a time period longer than two months will be used to determine average monthly self-employment earnings.

Costs directly related to producing the income are subtracted from the self-employment gross before the monthly earnings are included in the AFDC budget. Only those costs without which the income could not be produced may be subtracted. Such costs may not include depreciation, personal business and entertainment expenses, personal transportation, purchase of capital equipment and payments on the principal of loans for capital assets or durable goods. For room and board income, a standard $70 per roomer/boarder will be subtracted as the costs related to producing the income.

1. Income Received Less Frequently Than Monthly (Quarterly, Annually, Etc.)

Income of this type may include farming (including soil bank and related diversion payments), cattle ranching, business, or any other type of self-employment enterprise in which the income resulting from work performed over a period of time is received at one time rather than during the period in which the work is being performed.

The first step in computing monthly gross income in these situations is to calculate the gross annual income for the previous calendar year. If available, the individual's Federal Income Tax Return may be used to determine the annual income and the amount of costs related to producing the income. The annual allowable costs are subtracted from the gross annual income. The remainder is then divided by 12 to arrive at an average monthly amount. This figure is treated as gross earned income in the AFDC budget.

EXAMPLE: After expenses, Mr. Smith earns $1,200 annually from farming. This amount prorated over 12 months equals $100/month. Therefore, $100 gross earnings would be included in the budget each month.

If the previous year's income is not a fair reflection of the current year's income, the worker will determine, by averaging recent months or other means, an amount which will fairly reflect the current year's income. The worker will document the case record to clearly reflect the manner in which the income was determined and the justification for considering it a fair reflection of the current year's income.

2. Income Received Monthly or More Frequently (Weekly, Daily, Etc.)

Income of this type may include room and board, babysitting, sales from Avon, Tupperware, etc., or any other type of self-employment in which the income is received at least monthly as the work is performed.

The first step in computing monthly gross income in these situations is to determine an average monthly gross based on the latest two months' income. Verification of the latest two months' gross income and costs related to producing the income will be obtained. After allowable self-employment costs are subtracted from the monthly gross, an average of the latest two months will be determined to arrive at the monthly gross earnings which will be included in the AFDC budget.

NOTE: A standard $70 per roomer/boarder will be subtracted as the allowable costs for producing room and board income.

EXAMPLE: Ms. Woods sells Tupperware products and provides copies of her last two months' order invoices. These show her total sales and the items she had to purchase such as hostess gifts, receipt books, etc. For each month, her total gross income from sales less the costs related to producing the income is determined. These amounts are then averaged to arrive at a monthly income amount of $250. This amount ($250) will be included in the AFDC budget as gross monthly earnings.

If the latest two month's income is not a fair reflection of the individual's current income, then another method to determine the average monthly income will be the used (e.g., an average of more than two months' income). The worker will document the case record to clearly reflect the manner in which the income was determined and the justification for considering it a fair reflection of current income.

For any type of self-employment income, Form EMS-7, Summary of Last Case Action, will be completed to document the self-employment income computation. If a method other than those described above is used to determine the average monthly income, the worker will clearly explain on the EMS-7 the method used and the justification for considering it a fair reflection of the income.

2363 185% Income Limit

To qualify for AFDC, an assistance unit cannot have countable monthly gross income (earned and unearned) in excess of 185% of the standard of need for the appropriate family size (see chart below). Countable monthly gross income is determined for purposes of the 185% income limit without regard to the earned income exclusions ($30 and 1/3) or deductions. Other income specifically disregarded in FA 2351 for purposes of determining eligibility is not considered in determining gross income. Of any type of deemed income, only that portion deemed to the AFDC unit as unearned income is considered in computing gross income (Refer to FA 2377 - FA 2377.4).

The 185% income limit applies equally to applicants and recipients. At any time an assistance unit's monthly gross income (as determined in the previous paragraph) exceeds the 185% limit, the assistance unit is ineligible.

185% Income Limit

Number of
Individuals in
Assistance Unit                              Income Limit

       1                                                      $    518
       2                                                        1,036
       3                                                        1,304
       4                                                        1,573
       5                                                        1,822
       6                                                        2,109
       7                                                        2,377
       8                                                        2,646
       9 or more                                         2,914

The AFDC pretest is a special procedure used to determine whether a wage earner is eligible for the earned income exclusions. (Refer to FA 2365.2) The Pretest must be conducted for all AFDC applications involving earned income which pass the 185% gross income limit except in the following situations:

1. The wage earner is a former AFDC recipient and has already received the earned income exclusions for 4 consecutive months and has not been a non-recipient for 12 consecutive months since receiving the exclusions. In this situation, the wage earner is not entitled to the 1/3 portion of the exclusions nor is he entitled to the $30 portion unless the current month of application is within the 8 month period following the 4th consecutive month. (Refer to Item 2)
2. If the wage earner is a former AFDC recipient and has already received the earned income exclusions for 4 consecutive months but the current month of application is within the 8 month period following the 4th consecutive month, then he is entitled to the $30 portion of the exclusions.
3. If the wage earner received AFDC in any of the 4 months preceding the current month of application and Items 1 and 2 do not apply, then he is entitled to receive the earned income exclusions.

The AFDC pretest will be conducted (except as specified above) if a member of the assistance unit has earnings in the month payment would be effective. (See FA 2410). This may not always be the month of application. For example, if an AFDC application with earned income is received on April 29 and not certified until June 2, the pretest will be worked for May since payment will be effective May 28. However, if eligibility does not exist for the month in which the 30th day falls but may exist for the following month (for example, earnings are reduced in the following month), then a pretest must be conducted for that month prior to allowing the earned income exclusions. If there was no earned income in the month payment would be effective, the pretest will not be conducted even if there were earnings in the month of application.

The pretest will be conducted as follows:

1. Compute the gross monthly earnings, as outlined in FA 2362, for all persons in the assistance unit whose earnings are not specifically disregarded. (See FA 2351)
2. Deduct $90, or an amount equal to the gross earnings if less than $90.
3. Deduct verified child care expenses not to exceed the monthly maximums specified in FA 2365.5.
4. The remainder of earned income will be considered as net earned income.
5. Add net earned income to all countable unearned income (including countable child support) of the assistance unit. This will represent total countable income.
6. The total countable income will be subtracted from the 100% needs standard before the rateable reduction.
7. If there is any deficit, the wage earner is eligible for the earned income exclusions. A second budget will then be worked allowing the earned income exclusions and utilizing the reduced standard of need to determine eligibility and grant amount for the payment month. If eligibility exists, no further pretest computations will be made prior to allowing the earned income exclusions in subsequent payment months.
8. If there is no deficit, the wage earner is not eligible for the earned income exclusions in that month and therefore, the case is ineligible for payment.

2365 Computing Net Monthly Income

Net monthly income is the total countable income which is subtracted from the reduced standard of need to determine the payment amount. Net monthly income is computed as follows:

1. Determine the gross earned income for all persons in the assistance unit whose earnings are not specifically disregarded. (See FA 2351, FA 2390).
2. Deduct $90, or an amount equal to the gross earned income if less than $90, if applicable. (See FA 2365.1)
3. Deduct the $30 and 1/3 earned income exclusions if the wage earner is entitled to them. (Refer to FA 2365.2) Obtain the correct amount to deduct from the "AFDC Earned Income Exclusions (30 & 1/3)" Table. If the wage earner is not entitled to the 1/3 portion of the exclusions but is entitled to the $30 portion, deduct $30. NOTE: If the earnings remaining after the standard earned income deduction is less than $30, deduct the amount remaining.
4. Deduct verified child care expenses, if applicable, not to exceed the monthly maximums specified in FA 2365.5.
5. The remainder of earned income is considered net earned income.
6. Add all countable unearned income to the net earned income. This represents the net monthly income.

2365.1 Standard Earned Income Deduction

Each employed person included in the assistance unit, except those specified in FA 2365.6, will be allowed a standard deduction of $90 from his gross earnings for work related expenses and mandatory deductions. There is no option to verify actual expenses.

The standard deduction will not be allowed from an individual's earnings in any month in which a sanction has been imposed against the individual if the sanction is for either reason listed in FA 2365.6.

2365.2 Earned Income Exclusions

The earned income exclusions consist of: (1) the first $30 of earnings remaining after the standard earned income deduction; and (2) 1/3 of the remaining earnings. Each employed person included in the assistance unit, except those specified in FA 2365.6, is entitled to receive the $30 and 1/3 exclusions for 4 consecutive months. When an individual has had the $30 and 1/3 applied to his earnings for 4 consecutive months, then he is entitled to only the $30 portion for the period of 8 months following the 4th consecutive month of $30 and 1/3 (Refer to FA 2365.3 and 2365.4).

Once an individual has received the $30 and 1/3 for 4 consecutive months, then he cannot receive the 1/3 portion again until he has been a non-recipient of AFDC for 12 consecutive months. The $30 portion cannot be applied to earnings in any month after the 8th month following the 4th consecutive month of $30 and 1/3 until the individual has been a non-recipient of AFDC for 12 consecutive months.

In addition to active recipients, applicants who pass the AFDC Pretest (Refer to FA 2364) or who received AFDC in any of the 4 months preceding the month of application may have the $30 and 1/3 exclusions applied to their earnings as outlined in this section. Former recipients who are re-applying within the period of 8 months following the 4th consecutive month of $30 and 1/3 may receive the $30 exclusion until the end of the 8 month period.

To determine the total amount of exclusions ($30 + 1/3), compute the gross monthly earnings for each employed person in the assistance unit, deduct the standard earned income deduction, and refer to the following tables. For example, if the gross monthly earnings minus the standard deduction is $623.18, the total exclusions ($30 + 1/3) is $228.33.

NOTE: If less than the appropriate exclusions amount (i.e. $30 + 1/3, or $30) remains after the standard deduction is allowed, deduct an amount equal to the remaining earnings.

AFDC EARNED INCOME EXCLUSIONS (30 + 1/3)

Gross Minus                           Gross Minus                           Gross Minus
St. Deduct.      Exclusion      St. Deduct.      Exclusion      St. Deduct.        Exclusion

0 - 30              30.00         155.01 - 160        73.33          285.01 - 290        116.67
30.01 - 35       31.67         160.01 - 165        75.00          290.01 - 295        118.33
35.01 - 40       33.33         165.01 - 170        76.67          295.01 - 300        120.00
40.01 - 45       35.00         170.01 - 175        78.33          300.01 - 305        121.67
45.01 - 50       36.67         175.01 - 180        80.00          305.01 - 310        123.33
50.01 - 55       38.33         180.01 - 185        81.67          310.01 - 315        125.00
55.01 - 60       40.00         185.01 - 190        83.33          315.01 - 320        126.67
60.01 - 65       41.67         190.01 - 195        85.00          320.01 - 325        128.33
65.01 - 70       43.33         195.01 - 200        86.67          325.01 - 330        130.00
70.01 - 75       45.00         200.01 - 205        88.33          330.01 - 335        131.67
75.01 - 80       46.67         205.01 - 210        90.00          335.01 - 340        133.33
80.01 - 85       48.33         210.01 - 215        91.67          340.01 - 345        135.00
85.01 - 90       50.00         215.01 - 220        93.33          345.01 - 350        136.67
90.01 - 95       51.67         220.01 - 225        95.00          350.01 - 355        138.33
95.01 - 100     53.33         225.01 - 230        96.67          355.01 - 360        140.00
100.01 - 105   55.00         230.01 - 235        98.33          360.01 - 365        141.67
105.01 - 110   56.67         235.01 - 240       100.00        365.01 - 370       143.33
110.01 - 115   58.33         240.01 - 245       101.67        370.01 - 375       145.00
115.01 - 120   60.00         245.01 - 250       103.33        375.01 - 380       146.67
120.01 - 125   61.67         250.01 - 255       105.00        380.01 - 385       148.33
125.01 - 130   63.33         255.01 - 260       106.67        385.01 - 390       150.00
130.01 - 135   65.00         260.01 - 265       108.33        390.01 - 395       151.67
135.01 - 140   66.67         265.01 - 270       110.00        395.01 - 400       153.33
140.01 - 145   68.33         270.01 - 275       111.67        400.01 - 405       155.00
145.01 - 150   70.00         275.01 - 280       113.33        405.01 - 410       156.67
150.01 - 155   71.67         280.01 - 285       115.00        410.01 - 415       158.33
415.01 - 420  160.00        540.01 - 545      201.67         665.01 - 670         243.33
420.01 - 425  161.67        545.01 - 550      203.33         670.01 - 675         245.00
425.01 - 430  163.33        550.01 - 555      205.00         675.01 - 680         246.67
430.01 - 435  165.00        555.01 - 560      206.67         680.01 - 685         248.33
435.01 - 440  166.67        560.01 - 565      208.33         685.01 - 690         250.00
440.01 - 445  168.33        565.01 - 570      210.00         690.01 - 695         251.67
445.01 - 450  170.00        570.01 - 575      211.67         695.01 - 700         253.33
450.01 - 455  171.67        575.01 - 580      213.33         700.01 - 705         255.00
455.01 - 460  173.33        580.01 - 585      215.00         705.01 - 710         256.67
460.01 - 465  175.00        585.01 - 590      216.67         710.01 - 715         258.33
465.01 - 470  176.67        590.01 - 595      218.33         715.01 - 720         260.00
470.01 - 475  178.33        595.01 - 600      220.00         720.01 - 725         261.67
475.01 - 480  180.00        600.01 - 605      221.67         725.01 - 730         263.33
480.01 - 485  181.67        605.01 - 610      223.33         730.01 - 735         265.00
485.01 - 490  183.33        610.01 - 615      225.00         735.01 - 740         266.67
490.01 - 495  185.00        615.01 - 620      226.67         740.01 - 745         268.33
495.01 - 500  186.67        620.01 - 625      228.33         745.01 - 750         270.00
500.01 - 505  188.33        625.01 - 630      230.00         750.01 - 755         271.67
505.01 - 510  190.00        630.01 - 635      231.67         755.01 - 760         273.33
510.01 - 515  191.67        635.01 - 640      233.33         760.01 - 765         275.00
515.01 - 520  193.33        640.01 - 645      235.00         765.01 - 770         276.67
520.01 - 525  195.00        645.01 - 650      236.67         770.01 - 775         278.33
525.01 - 530  196.67        650.01 - 655      238.33         775.01 - 780         280.00
530.01 - 535  198.33        655.01 - 660      240.00         780.01 - 785         281.67
535.01 - 540  200.00        660.01 - 665      241.67         785.01 - 790         283.33
                                                                                         790.01 - 795       285.00
795.01 - 800       286.67        900.01 - 905      321.67
800.01 - 805       288.33        905.01 - 910      323.33
805.01 - 810       290.00        910.01 - 915      325.00
810.01 - 815       291.67        915.01 - 920      326.67
815.01 - 820       293.33        920.01 - 925      328.33
820.01 - 825       295.00        925.01 - 930      330.00
825.01 - 830       296.67        930.01 - 935      331.67
830.01 - 835       298.33        935.01 - 940      333.33
835.01 - 840       300.00        940.01 - 945      335.00
840.01 - 845       301.67        945.01 - 950      336.67
845.01 - 850       303.33        950.01 - 955      338.33
850.01 - 855       305.00        955.01 - 960      340.00
855.01 - 860       306.67        960.01 - 965      341.67
860.01 - 865       308.33        965.01 - 970      343.33
865.01 - 870       310.00        970.01 - 975      345.00
870.01 - 875       311.67        975.01 - 980      346.67
875.01 - 880       313.33        980.01 - 985      348.33
880.01 - 885       315.00        985.01 - 990      350.00
885.01 - 890       316.67        990.01 - 995      351.67
890.01 - 895       318.33        995.01 - 1000    353.33
895.01 - 900       320.00

Each employed person in the assistance unit is entitled to receive the $30 and 1/3 earned income exclusions for four consecutive payment months except in the situations outlined in FA 2365.6. Once the exclusions have been allowed for four consecutive months, then the person is not entitled to receive the 1/3 portion again until he has been a non-recipient of AFDC for twelve consecutive months.

The four months will begin with the first payment month in which (a) gross earnings are reduced by the exclusions even if the grant is not affected by the net earnings, or (b) an overpayment is determined to exist due to an untimely report of earnings and the sanction was applied to determine the overpayment amount (Refer to FA 9007).

To determine if a person has received four consecutive months of exclusions, the following will apply:

1. Any month in which the sanction is applied for a termination, reduction or refusal of employment, or for an untimely report of earnings will count as one of the 4 months even though the exclusions were not actually allowed. (Refer to FA 2366 and 2367)
2. When gross earnings are eliminated by the standard earned income deduction leaving zero earnings from which to deduct any exclusions amount, such month will not count as one of the 4 months and will interrupt the count.
3. When a case is suspended for payment, the suspended payment month will not count as one of the 4 months provided the suspension was not due to the sanction for an untimely report. However, the suspension month will not interrupt the count. It will continue in the next month.
4. In an overpayment situation, any month in which the client is determined to be ineligible for the grant paid in that month according to FA 9006 #1 will not count as one of the 4 months and will interrupt the count.
5. When the count is interrupted by a month described in items 2 or 4 above, then it starts over in the next month.

EXAMPLE: A client reported on May 9 that she started working April 21. She received her first paycheck on April 29 for 2 days of work. Based on the employer's statement, she continued to be eligible for June with the standard earned income deduction zeroing out her gross earnings. However, an overpayment exists for April and May due to her untimely report of earnings. On June 15, she reported an increase in the number of hours she will be working effective that date. Based on the increased hours, she continued to be eligible with earnings remaining after the standard deduction. The following shows the determination regarding her 4 months of exclusions.

When a client fails to report earnings timely resulting in an overpayment situation, any overpaid month in which the sanction is applied to determine the overpayment amount must count as one of the 4 months. Therefore, those months must be taken into consideration when determining if the client is entitled to receive the exclusions for continuing eligibility and grant amount. If the overpayment determination cannot be made prior to the deadline for affecting the next month's grant, then, to determine continuing eligibility and grant amount, the Service Representative will assume that each month in which the client had earnings will count as one of the 4 months until the overpayment determination is made. For example, if a client had had earnings for 4 or more consecutive months, then the 1/3 portion will not be allowed on a continuing basis as it will be assumed that he has already received his 4 months. However, when the overpayment determination is made, if it is found that the client was actually eligible for the 1/3 portion because any or all of the overpaid months did not actually count (e.g. ineligible on gross income limit), then an underpayment will exist for the month(s) in which the 1/3 portion was not allowed. The amount of the under- payment will be used to offset the overpayment.

2365.4 $30 Exclusion - Additional 8 Month Limit

When a wage earner has received the earned income exclusions for 4 consecutive months, then he may receive the $30 portion for an additional 8 months following the 4th consecutive month. The 8 months during which he may receive the $30 portion of the exclusions are limited strictly to the 8 calendar months following the 4th consecutive month in which he received the $30 and 1/3.

EXAMPLE: Ms. Jones received the $30 and 1/3 exclusions for January, February, March, and April. She is now entitled to receive the $30 portion for the months of May - December. In June, she terminated employment and has no earnings to consider in July. This does not alter the 8 month period. Should she become re-employed, she is entitled to the $30 portion of the exclusions only through the December payment month.

When a wage earner has received the earned income exclusions for 4 consecutive months, then he may receive the $30 portion for an additional 8 months following the 4th consecutive month. The 8 months during which he may receive the $30 portion of the exclusions are limited strictly to the 8 calendar months following the 4th consecutive month in which he received the $30 and 1/3.

EXAMPLE: Ms. Jones received the $30 and 1/3 exclusions for January, February, March, and April. She is now entitled to receive the $30 portion for the months of May - December. In June, she terminated employment and has no earnings to consider in July. This does not alter the 8 month period. Should she become re-employed, she is entitled to the $30 portion of the exclusions only through the December payment month.

2365.5 Child Care Expenses/AFDC Deduction

Employed persons who have child care expenses for a child included in the AFDC budget may receive assistance in meeting those expenses by one, or in some situations both, of the following methods:

1. Direct child care payment to the provider.
2. A deduction from earned income in the AFDC budget for verified child care costs up to certain maximums.

When an employed person has child care expenses, the Service Representative will explain the options available for helping the client meet those expenses and will coordinate with the Project SUCCESS Unit in determining which method will be most beneficial to the family. For example, in some situations, it may be more beneficial for the client to pay the child care costs and receive the child care deduction in the AFDC budget so that the family retains AFDC eligibility. In situations, though, in which the client's gross earnings are zeroed out by the standard and exclusions, the client would not receive any benefit from the child care deduction in the AFDC budget. Therefore, it would probably be more beneficial to the family for the agency to pay the child care costs directly and thus increase the family's total available income. If the client's monthly child care costs exceed the allowable maximum for the AFDC deduction, then a combination of allowing the maximum deduction and direct child care payments for the amount in excess of the maximum deduction may be used. The decision as to which method will be used to help meet the child care expenses will ultimately be the client's. However, the Service Representative and PS Case Manager will work together, when appropriate, to help the client make an informed decision. The manner in which child care expenses are being met will be documented on Form EMS-7.

Note: For employed applicants, the child care deduction will be allowed for verified child care costs when working a pre-test budget (FA 2364) and to determine initial eligibility. If the applicant is AFDC eligible with the child care deduction allowed and is otherwise AFDC eligible, then the determination described above will be made.

AFDC Child Care Deduction

Each employed person except those specified in FA 2365.6 may be allowed a child care deduction. The amount of the deduction will be the monthly amount of child care paid for a child(ren) included in the AFDC unit up to the following maximums:

1. $175 per child per month for a child age two and over; and
2. $200 per child per month for a child under age two.

Child care expenses must be verified by the child care provider before the deduction can be allowed. The monthly child care amount will be computed in the same manner as gross earnings are computed. That is, if child care is paid weekly, the weekly amount will be multiplied by 4.334; if paid bi-weekly, the bi-weekly amount will be multiplied by 2.167, etc.

The child care deduction will be applied to the earnings amount remaining after application of the standard earned income deduction and the earned income exclusions, if appropriate. If the earnings amount remaining after the standard deduction and exclusions is zero, then no child care deduction will be allowed. However, the case record should be documented regarding child care costs, and if appropriate, Project SUCCESS or non-JOBS child care should be considered.

Project SUCCESS will be notified if the $90 earned income deduction or 30 1/3 exclusion zeroes out the earnings before the child care deduction has been applied or if the amount of child care paid exceeds the amount that has been allowed in the AFDC budget.

The child care deduction will not be allowed from an individual's earnings in any month in which a sanction has been imposed against the individual for either reason listed in FA 2365.6.

The standard earned income deduction, the earned income exclusions ($30 + 1/3), and the child care deduction will not be allowed from the gross earnings of an individual in the following situations:

1. The individual refused, reduced, or terminated employment without good cause. (Refer to FA 2366).
2. The individual failed without good cause to report employment or an increase in the amount of earnings received within 10 days of the date employment began or the increase was received. (Refer to FA 2367)

2366 Termination or Reduction of Employment or Refusal to Accept Bona Fide Offer of Employment

The earned income standard deduction, exclusions and child care will not be allowed for one payment month from the earnings of an individual (who is not the PWE in an AFDC-UP case) when:

1. The individual terminated his employment or reduced his earnings without good cause within the period of 30 days preceding the date of application or the month in which the agency became aware of the termination or reduction.
2. The individual refused without good cause to accept a bona fide offer of employment within the period of 30 days preceding the date of application or the month in which the agency became aware of the refusal. A bona fide offer of employment exists when such offer is made through the Employment Security Division or is otherwise offered by an employer and the individual concerned is able to engage in said employment. The person must be notified by the Agency of the fact that the offer is considered bona fide.

This sanction can be applied only when the individual continues to have earned income which will be included in the budget prospectively and will apply to that income for only one month.

EXAMPLE: On October 19, Ms. Jones reports she quit her job without good cause that day. She will receive her last pay check on November 2. Since she will receive earned income in November which must be included in the budget for the November payment, the sanction will be applied to the earnings expected to be received in November.

Any month in which the sanction is applied counts as an exclusions month in terms of the 4 month limit. (Refer to FA 2365.3)

This sanction applies equally to Project SUCCESS participants as to non-Project SUCCESS individuals. However, the Project SUCCESS sanction for refusal to participate and the "good cause-employment" sanction cannot be applied simultaneously. The Project SUCCESS sanction will take precedence over the "good cause-employment" sanction.

NOTE: If the Principal Wage Earner (PWE) in an AFDC-UP case terminates or refuses employment without good cause, refer to FA 2241.5.

All decisions to deny an application, close a case, or reduce a grant which involve good cause or bona fide offer must be approved by the EMS County Supervisor or his/her designated representative before the action can be taken.

2366.1 Determination of Good Cause

An individual is considered to have good cause for refusing to accept employment or for terminating or reducing his earnings if:

1. The person is ill, incapacitated or age 60 or older.
2. The employment site is so remote that the total commuting time each day would be unreasonable. (Two hours per day)
3. No means of transportation to and from the job site is available to the individual.
4. The individual is attending school full time, as defined by the school, in either elementary, secondary, college, or special vocational school.
5. The individual's presence is required in the household on a continual basis because of illness or incapacity of a member of the household.
6. The individual is required in the home because adequate child care services are not available.
7. The offer of employment is not a specific job at a stated wage which meets the Federal minimum wage.
8. The working conditions would be a risk to the person's health or safety.
9. The job is available because of a labor dispute.
10. The job is not within the physical or mental capacity of the individual.
11. The individual was subjected to discriminatory practices in terms of age, sex, race, religion, handicap or ethnic origin by his employer or supervisor.
    

2367 Failure to Report Employment or Increased Earnings in a Timely Manner

The client has the responsibility to report employment or an increase in the amount of earnings within 10 days of the date employment began or the increase in earnings was received. When the client fails to report without good cause within the 10 days, then the sanction consists of allowing no standard deduction, exclusions, or child care from gross earnings. Any month in which the sanction is applied counts as an exclusions month in terms of the 4 month limit (Refer to FA 2365.3).

When the client fails to report timely without good cause, the sanction will be applied only in the overpayment determination. Eligibility and grant amount for the months following the month in which the untimely report is made will be determined without application of the sanction.

When determining the overpayment, the sanction will be applied to the month in which the change occurred and each subsequent month through the month in which the untimely report was made.

EXAMPLE: On July 15, Ms. Jones reports that she began working on May 15 and received her first paycheck on May 28. She did not have good cause for failing to report timely, i.e. on or before May 25. Eligibility and grant amount for August is determined without application of the sanction (i.e., deductions and exclusions are allowed) and the family remains eligible. For the overpayment, the sanction will be applied to determine the overpayment amount for the months of May (month in which the change occurred) through July (month in which the untimely report was made).

The client will be given the opportunity to show that good cause exists for not reporting within 10 days. The determination as to whether good cause does or does not exist will be left to the judgement of the Service Representative with approval by the EMS County Supervisor or his/her designated representative. A narrative entry will be made in the case record regarding the determination. If good cause is determined to exist, then the appropriate standard deduction, exclusions, and child care will be allowed in the overpayment determination.

The following are possible sources of unearned income:

1. Pensions, annuities, insurance benefits, Social Security, Railroad Retirement, Veterans' Benefits, military allotments, Teachers' Retirement, State Retirement, Workmen's Compensation, Miners Pensions, and Black Lung benefits.
2. Payments received for the rental of rooms, apartments, dwelling units, buildings, or land. Taxes and the expense of upkeep may be deducted.
3. Interest, dividends, and income from capital investments.
4. Payments from estates, trust funds, or other personal property which cannot be converted into cash because of legal provisions.
5. Child support payments.
6. That portion of the income of certain relatives living with the assistance unit which must be deemed available to the unit.
7. That portion of the income of an alien's sponsor which must be deemed available to the alien.
8. Lump sum payments.
9. Contributions from organizations, churches, friends, relatives, or social agencies.
   

The monthly amount of any unearned income not disregarded must be determined and verified and included in the budget. Verification will normally be by documentary evidence obtained from the source of the income. Another means of verification may be used if it clearly establishes the source and amount of the income.

The monthly unearned income amount which will be included in the AFDC budget will be determined in the same manner as gross earned income. That is, if unearned income is received weekly, the weekly amount will be multiplied by 4.334; if received bi-weekly, the bi-weekly amount will be multiplied by 2.167; and if received semi-monthly, the semi-monthly amount will be multiplied by 2. In addition, if the amount of unearned income fluctuates from month to month, then an average of the past two months will be determined.

In addition, if a client is potentially eligible for any benefit, (other than SSI), he will be required to apply, and verification of his application for such benefits will be included in the case record. Once it is verified that he has applied for the benefit, AFDC assistance will not be denied nor delayed pending a decision on the application. The case should be added to the Worker Alert file to check on the status of the application.

2372 Social Security Benefits

Monthly Social Security benefits are paid upon the retirement, disability, or death of a covered worker. A covered worker is one who has worked in a job covered by Social Security, either as an employee or a self-employed person, for a specified length of time, depending upon his age. Social Security now covers almost all jobs and workers, including most self-employed persons, most State and local employees, household and farm employees, members of the Armed Forces, and members of the clergy.

Retirement benefits are payable at age 62. Disability benefits are payable at any age under 65 if the worker is determined to be disabled according to SSA criteria. Benefits may also be paid to the following dependents of a covered worker:

1. The unmarried children of a retired, disabled, or deceased worker who are

1. Under age 18, or 22, if full time students; or
2. Age 18 or over who were severely disabled before age 22 and who continue to be disabled.

An illegitimate child may be eligible for benefits based on his father's earnings if paternity is acknowledged or otherwise established. In certain situations, the stepchildren of a worker may also be eligible for benefits.

2. The spouse of a retired or disabled worker if he/she is caring for a child who is receiving benefits based on the worker's earnings.
3. The spouse of a retired or disabled worker if the spouse is age 62 or older.
4. The divorced spouse of a retired or disabled worker if he/she is age 62 or older and the marriage lasted at least ten years (20 years if divorced before January, 1979).
5. The widow or widower of a deceased worker if she/he is

1. Caring for a child who is receiving benefits based on the worker's earnings; or
2. Age 60 or older; or
3. Age 50-59 and becomes disabled within a specified time period according to SSA policy.
   

6. The divorced wife of a deceased worker if she is

1. Caring for a child who is receiving benefits based on the worker's earnings, or
2. Age 60 (50 if disabled) or older if the marriage lasted 10 years or more (20 years if divorced before January, 1979).

7. The dependent parents of a deceased worker who are age 62 or older.

8. In certain situations, the dependent grandchildren of a retired, disabled, or deceased worker.

Generally, a marriage must have lasted at least one year before the dependent spouse and children of a retired or disabled worker can receive monthly benefits, and at least nine months before the survivors of a deceased worker can receive benefits. If the divorced spouse of a worker remarries prior to age 60, then he/she would not be entitled to benefits based on the ex-spouse's earnings.

In cases in which more than one dependent of a worker is receiving benefits, e.g. a wife and two children, each dependent's benefit amount is based on a family maximum established by SSA policy. The maximum family payment is usually divided equally among the eligible dependents. Generally, if one of the eligible dependents becomes ineligible for benefits, e.g. a child reaches age 18 and is not attending school, then the benefit amounts of the remaining eligible dependents will be adjusted so that the family's total monthly amount remains the same.

The Service Representative will verify benefit entitlement and amount. Sources of verification include the BENDEX, award letters, Form SSA-1610, mark sense query cards, etc. The mark sense query card should be used to verify benefits only when establishing initial eligibility on an application, or when other sources of verification are not available or are inconsistent with the information reported by the casehead. When a mark sense query card is sent, it must be annotated indicating its purpose (e.g., AFDC - Initial Eligibility or AFDC - Discrepancy in amount reported and BENDEX, etc.) and that alternative sources of information have been checked.

When application is made for children who are deprived of parental care and support due to the death or disability of a parent, the Service Representative will send a mark sense query card to verify entitlement or non-entitlement for Social Security benefits based on the deceased or disabled parent's earnings.

The Service Representative will also investigate the possibility of entitlement for and receipt of Social Security benefits at any other time there is an indication of entitlement for any person whose needs and/or income are included in the budget.

2373 Railroad Retirement Benefits

Railroad Retirement Benefits are paid to individuals and spouses covered under the Railroad Retirement Act. An individual may receive both Railroad Retirement and Social Security, if covered under both programs, and the wife of a Railroad Retirement beneficiary may receive a wife's benefit while drawing Social Security.

Information on Railroad Retirement Benefits may be secured from:

Director
U. S. Railroad Retirement Board
844 Rush Street
Chicago, Illinois

If the applicant has a son, daughter, or spouse in the Armed Services, the Service Representative will explore the possibility of obtaining an allotment. Provision has been made for the exchange of information between the U. S. Army and public assistance agencies. Upon request, the County Office will advise the Army as to whether an individual is receiving assistance and the amount of the current payment. Any other information will be provided only in accordance with regulations on the confidentiality of information. The Army will provide state public assistance agencies with information on the status of allotments of enlisted men whose dependants have applied for or receive public assistance. This information should be requested on Form SS-116.

The address of the Army Finance Center is:

Army Finance Support Agency
Indianapolis, Indiana 46249

The address of the Navy Finance Center is:

Navy Finance Center
Federal Office Building
Cleveland, Ohio 44199

The address of the Air Force Finance Center is:

Air Force Finance Center
3800 York Street
Denver, Colorado 80205

If the applicant is a veteran, or the wife, widow, child, or other dependent, full exploration will be made of potential eligibility for Veterans' Benefits. Information on Veterans Benefits should be requested on Form SS-52 from:

VA Regional Office
1200 W. 3rd
Little Rock, AR 72201

County Office workers will not attempt to represent veterans or dependents in filing claims. Such persons should be referred to Service Officers of the local American Legion Post, County or District Service Offices, Veterans' Administration Contact Offices, or the Veterans' Service Office, American Legion Arkansas Department, 700 West Capitol, Little Rock, Arkansas.

2376 Child Support

Child support is any money paid directly to the AFDC unit or to the CSEU by a legally liable individual or by a putative father which is intended to be support for the AFDC child. Payments to a vendor or provider made in lieu of direct child support payments is not child support.

For payments from a putative father to be considered as child support payments, either the child's mother or, preferably, the putative father must acknowledge that such payments are intended to be support for the child. If that acknowledgement is made, then the payments from the putative father will be treated in the same manner as payments from a legally liable individual, i.e. subject to the child support assignment, the $50 child support disregard, etc.

The first $50 of the total child support payments paid directly to the assistance unit and/or collected by the CSEU is totally disregarded in determining AFDC eligibility. In addition, the first $50 of the total child support received in a month, including refunds paid by the CSEU from collected support payments and direct support payments received and retained by the client, is totally disregarded in determining grant amount.

After the $50 disregard has been applied to the total child support payments, any remaining child support is considered in determining eligibility and/or grant amount only in the following situations:

1. For initial applications, re-applications, or applications to add a child, child support payments in excess of $50 received by the applicant are considered in all steps of determining income eligibility, i.e., gross income limit, AFDC Pre-test and Reduced Standard of Need budget. If the applicant is eligible with the child support included in these steps, then the grant amount to be authorized is computed without regard to the child support payments. However, any retroactive payment to be authorized will be computed with the child support included. (Refer to FA 2411)
2. For active cases, current child support payments in excess of $50, whether received directly by the client or paid to the CSEU, are considered in all steps of determining income eligibility. If eligibility exists with the child support included, then the grant amount is computed without regard to the child support payments unless the client is retaining support payments and the sanction for non-cooperation is imposed (Refer to Item 3 below).
3. If the client has failed to turn in assigned child support payments and the sanction for non-cooperation has been imposed, then retained child support payments in excess of $50 will be considered in computing the grant amount for the corresponding payment month. If the client receives a CSEU refund in the same month, then the refund and the retained support payment will be combined prior to applying the $50 disregard.
4. Child support refunds in excess of $50 paid to the client by the CSEU are considered in computing the grant amount for the corresponding payment month. Child support refunds will not be considered in determining eligibility.

A portion of the income of certain non-SSI relatives living with the AFDC unit but who are not themselves included in the unit must be deemed as available income when determining eligibility and grant amount. Those relatives whose income must be deemed are:

1. The stepparent of the AFDC dependent child.

Exception: The income deeming procedure does not apply when the non-caretaker stepparent is out of the household due to military service.

2. The parent(s) of the AFDC child's minor parent who is living in the home with the child.
3. The spouse of a specified relative other than a parent if such relative is included in the assistance unit.

A portion of the income of certain aliens' sponsors must also be deemed as available income to the alien. The sponsor-to-alien deeming procedure applies only when the sponsor is an individual. When an alien is sponsored by an agency, then such alien is AFDC ineligible for a period of three years from the date of the alien's entry into the United States. (Refer to FA 2224)

The income disregards specified in FA 2351 also apply to the income of any person whose income must be deemed.

If a person whose income must be deemed is contributing cash directly to a member of the unit which is intended for use solely by that member in any way he/she chooses, then the amount of such cash contribution must be determined. If the direct cash contribution exceeds the deemed income amount, then the direct contribution amount will be included as income instead of the deemed amount. Example: After applying the income deeming procedures to the income of a child's stepparent, there is no deemed income to include in the budget. However, the stepparent states he gives the child a $5/week cash allowance from the stepparent's own income. Since the stepparent's direct cash contribution to the child ($21.67/month) is greater than the deemed income amount (0), the contribution must be included as unearned income.

Sections 2377.1 - 2377.4 outline the income deeming procedures for each of the above situations.

2377.1 Stepparent Income

Unless the dependent child's stepparent is an SSI recipient, all of his/her income remaining after certain deductions is considered as unearned income to the stepchildren. (See the Exception under FA 2377, #1.) No portion of an SSI recipient's income is considered in determining eligibility or grant amount. To determine that portion of the Non-SSI stepparent's income to consider:

1. Compute the stepparent's gross monthly earned income.
2. Deduct $90. This deduction applies to earnings only.
3. Add the remaining earned income to unearned income.
4. Deduct an amount equal to the 100% Standard of Need for the stepparent and any of his dependents (including his spouse, if appropriate) who are living in the home but are not considered in the assistance unit and who the stepparent claims as dependents for federal income tax purposes.

Note: An SSI recipient claimed as a dependent for federal income tax purposes by the stepparent will be included in the stepparent's 100% standard deduction.

Exception: The needs of a person who is not included in the AFDC unit due to a sanction, i.e. Project SUCCESS, Child Support, or refusal to meet the SSN enumeration requirement, cannot be included in the stepparent’s 100% standard deduction.

5. Deduct the amount paid by the stepparent to individuals not living in the home who the stepparent claims as dependents for Federal income tax purposes.
6. Deduct court ordered or voluntary child support and/or court ordered alimony payments the stepparent pays to persons not living in the household. Payments made by a putative father for the support of his child will be considered child support.
7. The remainder is considered unearned income in determining eligibility and the amount of assistance.

The above procedure applies to all situations involving a dependent child's stepparent who is not an SSI recipient. Form EMS-72, Stepparent Income and Deduction, will be given to the stepparent to complete and return with the necessary verification.

In situations in which the AFDC child's parent and stepparent have just married, continuing eligibility in terms of the stepparent deeming provision will be determined based on the agency's best estimate of the stepparent's monthly income.

If the stepparent and the child's parent separate and the stepparent is no longer living with the AFDC unit, then deeming of his/her income will be discontinued.

2377.2 Income of a Minor Parent's Parent

When the AFDC child's parent is a minor living in the home with the child and the non-SSI parent(s) of the minor parent is also living in the home, then a portion of the income of the minor's parent(s) must be deemed available to the unit and included in the AFDC budget. This provision applies equally to un-emancipated and emancipated minor parents.

This income deeming provision does not apply if the minor's parent is an SSI recipient or if the minor is included in the AFDC unit as an AFDC dependent child. It also does not apply to the stepparent of a minor parent. If the minor is included as a dependent child, then his/her parent's income will be considered in the same manner as for any other AFDC parent, and, if appropriate, his/her stepparent's income will be deemed as for any other stepparent of a dependent child.

The income deeming procedure for the parent of a minor parent will be the same as for a stepparent (Refer to FA 2377.1). If both of the minor's parents are living in the home and both have income, then each one's income must be determined. If both have earnings, each parent will be entitled to his/her own $90 earned income deduction. After the earned income deduction has been applied to gross earnings, then the net earnings and unearned income of each parent will be combined for the remainder of the steps in the deeming procedure. If the minor parent is ineligible to have his/her needs included in the AFDC budget, then the minor will be included in the 100% need standard deduction unless the reason for ineligibility is a Project SUCCESS, Child Support, or refusal to meet the SSN enumeration requirement sanction. (Refer to FA 2377.1, #4)

The minor's parent must provide verification of his/her income and, if claimed, any child support or other payments made to persons outside of the home.

Example: An AFDC unit consists of a 16 year old minor parent and her baby. Household members include the minor parent's mother, father, and two sisters. The minor's mother has gross monthly earnings of $150 from a part-time job. The minor's father also has gross monthly earnings of $536 from a full-time job. He also receives a monthly Army retirement check of $600. Neither parent is making child support, alimony, or other payments to dependents outside of the home. Assuming a 4 person 100% standard of $820, their income would be deemed as follows:

1. $ 150 - Mother's Gross Earnings
       -90 - E.I. Deduction
     $ 60 - Mother's Net Earnings

2. $ 536 - Father's Gross Earnings
       -90 - E.I. Deduction
    $ 446 - Father's Net Earnings

3. $ 60 - Mother's Net Earnings
  + 446 - Father's Net Earnings
  + 600 - Father's Army Retirement
 $1106 - Total Monthly Income

4. $1106 - Total Monthly Income
      -820 - 100% Need Standard for 4 (mother, father, and their 2 other daughters)
    $ 286 - Amount to be Deemed and Included in AFDC Budget as Unearned Income

When a specified relative other than a parent chooses to be included in the AFDC budget with the dependent children and such relative has a non-SSI spouse living in the home, then a portion of the spouse's income must be considered in determining eligibility and grant amount. No portion of an SSI recipient's income will be considered. To determine that portion of the non-SSI spouse's income to consider:

1. Apply steps 1 - 4 of the stepparent income deeming process under FA 2377.1 to the spouse's income.
2. If the spouse is making payments to individuals not living in the home who the spouse claims as dependents for federal income tax purposes, deduct the verified amount paid not to exceed the one-person 100% need standard for each such individual. Example: Mr. Jones sends $300.00 per month to his son who is away at school. If the one-person 100% standard was $280, Mr. Jones could be allowed a deduction of only $280 since the amount he actually sends is in excess of the one-person standard. However, if he were sending the $300.00 to two children, then the full $300.00 could be deducted since it is less than the maximum allowable amount for two ($280.00 x 2 = $560.00).
3. If the spouse is making court ordered or voluntary child support and/or court ordered alimony payments to persons not living in the home, deduct the verified amount paid up to the one-person 100% need standard for each such individual. (See Example above). Payments made by a putative father for the support of his child will be considered child support.
4. The remainder is considered unearned income in determining eligibility and grant amount.

If the relative chooses to be included in the AFDC budget, then it will be the relative's responsibility to provide verification of the spouse's income. In addition, the relative must provide verification of any payments described in steps 2 and 3 above before a deduction for them can be allowed.

If the relative fails to provide the spouse's income verification, then the relative's needs will not be included in the budget and the children's eligibility and grant amount will be determined without regard to the relative's or the spouse's income.

When an alien has been sponsored by an individual, then a portion of the sponsor's income must be deemed available to the alien for a period of three years following the alien's entry into the United States unless the alien is/was:

• Admitted prior to April 1, 1980 as a conditional entrant refugee under section 203 (a) (7) of the Immigration and Nationality Act;
  

• Admitted after March 31, 1980 as a refugee under Section 207(c) of the Immigration and Nationality Act;

• Paroled into the United States as a refugee under Section 212(d)(5) of the Immigration and Nationality Act;

• Granted political asylum by the U.S. Attorney General under section 208 of the Immigration and Nationality Act;

• A Cuban or Haitian entrant, as defined in section 501(e) of the Refugee Education Assistance Act of 1980;

• The dependent child of the sponsor or sponsor's spouse;

• An AFDC applicant (approved or denied) prior to October 1, 1981.

If none of the conditions specified above apply to an alien who is applying, or has applied, for AFDC for the first time after September 30, 1981, then the Service Representative must determine whether the alien has an individual sponsor. A sponsor is defined as any person who executed an affidavit(s) of support or similar agreement on behalf of an alien as a condition of the alien's entry into the United States.

If the alien does have a sponsor who is not an AFDC or SSI recipient, then it will be the alien's responsibility to provide information and verification of the sponsor's income and obtain any cooperation necessary from the sponsor.

To determine the amount of the sponsor's, or his/her spouse's income which will be deemed to the alien, the Service Representative will:

1. Determine the sponsor's gross monthly earned income and deduct 20%, up to $175, of the gross.
2. Add any unearned income to the gross earned after the 20% deduction.
3. Deduct the 100% standard of need for the same family size as the sponsor and those persons living in the same household whom the sponsor claims as dependents for federal income tax purposes and who are not included in an AFDC budget.
4. Deduct any amounts actually paid by the sponsor to persons not living in the same household who are claimed by the sponsor as dependents for federal income tax purposes.
5. Deduct any alimony or child support payments paid to persons not living in the same household.
6. The amount remaining after all allowable deductions will be included as unearned income in the alien's AFDC budget.

Any income deemed to a sponsored alien will not be considered in determining the need of other unsponsored members of the alien's family except to the extent the income is actually available. When a person is the sponsor of two or more aliens, the amount of deemed income and resources will be divided equally among the sponsored aliens.