Self-Employed Applicant Doesn’t Live with Dependent Wife

Q An applicant for a unit at our site says he's married but does not live with his wife. He is self-employed and provided a copy of his joint tax return to help us determine his income. How do we handle the wife's income? Does it matter that he claims her as a dependent on his tax return?

A How you treat the wife's income depends on whether the wife is a temporarily absent household member or a permanently absent person, says affordable housing consultant Elizabeth Moreland, an expert on HUD rules and the low-income housing tax credit (LIHTC) program.

HUD defines a temporarily absent person as someone who usually lives in the unit, but who is away temporarily and expects to return within a reasonable period of time. A permanently absent person is defined as someone who was once a household member but who is no longer part of the household and does not expect to return within a reasonable period of time.

Temporarily absent household members are treated as if they are part of the household. That means you count the temporarily absent person's income toward the income limit of the unit. If a person is permanently absent, you do not count his or her income toward the income limit.

In the circumstances you describe, you need to verify whether the wife is temporarily or permanently absent. To verify this, you must determine whether she is usually part of the household and has a reasonable date of return. If yes, she is temporarily absent. If no, she is permanently absent.

Since the couple is married, you might presume that she is temporarily absent, Moreland says. However, if husband and wife are separated and she has set no date of return, you must consider her to be permanently absent. The couple's actual legal relationship can be documented with separation papers, assuming a divorce is pending. Their legal status can also be verified by a signed self-affidavit from the applicant attesting to the fact that the wife does not have an expected date of return.

In situations where a couple is separated but has not embarked on a divorce action, a signed self-affidavit is the way to proceed. The husband's tax return—married filing jointly—has no bearing on whether the wife is defined as temporarily absent or permanently absent.

As for dealing with household assets in this situation, unless there is legal documentation that assets were divided prior to divorce, you should treat all assets as marital property and split them evenly between the two.

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