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:

  1. 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.

  2. 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.

  3. Royalty Payment Examples

    1. 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.

    2. 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.

    3. 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.