7120 Income Averaging
- The income averaging budgeting method is used to budget self-employment
and intermittent (earned and unearned income) in the cash, Food Assistance,
and Child Care programs. Income averaging is also used for all programs
when irregular and intermittent income received on a monthly basis in
differing amounts as indicated in 7110
(3) above. In addition, Child Care, earned and unearned income received
in differing amounts on a monthly basis may be averaged. Income averaging
is also used to budget child support income for the Food Assistance and
Child Care Programs.
7121 Intermittent
Income and Deductions - For intermittent income and deductions,
the monthly amount shall be established by dividing the income/deduction
by the proper number of months for the period that the income/deduction
is intended (e.g., 3 months for quarterly, etc.). A fair estimate for
the time period used for averaging shall be established with the client.
Once the time period is established, the status of the case does not affect
the time period. See example below. The case record shall clearly indicate
that the income/deduction is being treated as intermittent. Intermittent
unearned income received prior to the first eligibility period shall not
be considered. However, if an average is established for a program and
the client applies for another program, the intermittent income will be
counted since a time period to count the income has already been established.
Royalty payments from tribal profits made to tribal members (e.g., casino
payments, etc) will be treated as intermittent income. However, budgeting
Indian royalty payments will be averaged annually, using the IRS 1099,
or the same information from a reliable source, from the prior year’s
income.
Since intermittent income is counted from the date of receipt and budgeted
for the period of time that it is intended, it is possible that two monthly
amounts could be considered for the same month. (See 6213
and 6314.)
Examples:
- Food Assistance client receives intermittent semi-annual income
in April. Income is divided by 6 and 1/6th of total is counted each
month for the months of May thru October. Client receives next semi-annual
payment in September so 1/6th of payment is budgeted for each month
of October thru March. Two payments will be considered in October.
- Using example 1, the case closes at the end of June. The client
reapplies in August. Since an existing time period had been established
for counting the income of May through October, the intermittent income
will be counted when determining benefits for August through October.
If the payments continue, the intermittent income will continue to
be counted.
- Royalty Payment Examples
- The IRS1099 received for the prior year’s income will be used
to budget income for the benefit year. An application is received
in September. A quarterly royalty payment is received in the month
of September. Using the IRS 1099, or the same information from
a reliable source, received in January of that year, divide the
total gross income by 12 months to determine the monthly amount
counted in the budget. This amount will be budgeted throughout
the certification period.
- Application for benefits received in October. Next royalty
payment will be received in December. Using intermittent income
rules, royalty payments will not be budgeted until the January
benefit. Using the current year’s IRS 1099, or the same information
from a reliable source, you will begin budgeting royalty payment
income in January.
- An individual has recently been identified as belonging to
a tribe and is now eligible for a royalty payment. As this individual
has no IRS 1099 for the previous year, a prospective payment determination
will need to be used in the budgeting. No income will be budgeted
until a royalty payment is actually received. Once this payment
is received, it will be averaged over the time period it is to
cover, and will remain in place until the next IR or review. At
the time of the IR, follow the rules of 9122.6(1)(c)(v)
if a change of $50 or more is reported.