1115.035.00 INCOME Deductions

IM-#111 October 22, 2004

The following EU expenses are allowed as deductions in the month the expense is billed or becomes due regardless of when or if the EU intends to pay the expense. These expenses are allowed as deductions when no bill is issued in the month payment is due such as rent. Refer to specific policy regarding each of the following income deductions:

NOTE: The cost of producing self-employment income is an expense of producing income and when self employment is considered earned income, the earned income deduction is allowed after all expenses of producing income are subtracted.

The EU must expect to be billed for the expense during the certification period. Use bills from the most recent months to anticipate expenses unless the EU is reasonably certain a change will occur. For billed expenses, except for expenses that can be averaged, allow a deduction only in the month the expense is billed or otherwise becomes due. (Do not consider the intent to pay.) Past due amounts carried forward from past billing periods are not deductible even if included with the most recent billing and actually paid by the EU.

EXAMPLE: Mr. J applied for FS on 3/6. He declared a shelter cost for rent of $300 for March. This included $150 for rent for February (past due) with the remaining $150 for March rent. Only $150 for March is an allowable rental expense.

Expenses previously allowed as a deduction are not allowed again.

EXAMPLE: Mr. B paid his taxes of $150 on 3/10 and applied for FS on 3/12 and was certified for only one month, March. If he elects not to average expenses, the total expense for the taxes can be allowed in March. If Mr. B reapplies for food stamps within the 12-month period of which his taxes could have been averaged, his taxes cannot be allowed as an expense because the total expense was allowed in the month of March.

Expenses are deductible if someone outside the EU provides the service and the EU does not pay for the service through an in-kind benefit. For example, a dependent care deduction is not allowed if another EU member provides the care.

EXAMPLE: The EU consists of Ms. E; her daughter Sabrina; and Ms. M, Ms. E's mother. Ms. M provides child care for Sabrina while Ms. E is working. Ms. E pays Ms. M $75 per week for caring for Sabrina while she works. The child care paid to Ms. M is neither income for Ms. M or an allowable deduction for Ms. E.

Always review the Food Stamp Budget Summary screen (FM4A) prior to authorizing a case action. From the Budget Summary Screen press F15=EXPSUM to review the Expense Summary screen to ensure expenses you expect to be budgeted are included in the budget. If the expense is incorrect, return to the appropriate screen and correct the inaccurate information.

1115.035.01 Disallowed Expenses

IM-#111 October 22, 2004

Any expense, in whole or part, covered by educational income which has been excluded shall not be deductible. Expenses covered by an excluded reimbursement or vendor payment are not deductible. For example, the portion of rent covered by excluded vendor payments is not calculated as part of the EU's shelter cost.

EXCEPTION: Expenses covered by direct or indirect assistance under the Low Income Home Energy Assistance Act of 1981 is an allowable expense.

1115.035.02 Averaging Expenses

IM-#36 April 22, 2010IM-#111 October 22, 2004

The EU may elect to have fluctuating expenses averaged. Expenses billed less often than monthly may be averaged forward over the interval between scheduled billings. If no scheduled interval exists, average the expense over the period of time it was intended to cover.

The EU can change (once per certification period) from lump sum budgeting to averaging expenses, or from averaged to lump sum. Do not allow an expense more than once.

EXAMPLE: Mr. B paid real estate taxes of $150 on 2/14. He applied for FS on 3/1 and elected to have his expenses averaged. He was certified for a period of 12 months, March through February. Since the taxes covered a period of 12 months, l/l2 of $150 is allowed for each month certified.

1115.035.03 Converting Deductions to Monthly Amounts

IM-#58 September 2, 2010,  IM-#111 October 22, 2004

Expenses billed less often than monthly are converted into a monthly amount. Select the correct frequency code for each expense. FAMIS converts the expense to a monthly amount. When a one-time or expense billed less often than monthly is being allowed for one month only, enter the total expense and select the monthly frequency code. End date the expense in the same month.

1115.035.05 Earned and Standard Income Deductions

IM-#59, October 1, 2018, IM-#60, September 14, 2016, IM-#89 September 23, 2015, IM-#47 September 10, 2014, IM-#80 September 10, 2013, IM-#79 September 4, 2012, IM-#51 September 2, 2011, IM-#58 September 2, 2010,   IM-#62 August 28, 2009, IM-#68 September 03, 2008IM-#79 August 28, 2007IM-#84 August 31, 2006IM-#84 August 31, 2006IM-#102 September 1, 2005IM-#111 October 22, 2004IM-#125 September 19, 2003

Earned Income Deduction: Twenty percent (20%) of gross earned income received as compensation for services performed as an employee, income received from self-employment after deducting the self-employment business cost, and monies received as a training allowance is deducted from the EU's total gross earned income. (This deduction does not apply to workmen's compensation, strike benefits, or rental income unless such rental income meets the definition of self-employment income.)

Standard Income Deduction: In computing an EU's total countable income, the appropriate standard deduction is allowed. The standard deduction used depends upon the number of eligible members in the EU. The standard deductions are as follows:

FAMIS determines the correct standard deduction based on the size of the EU.