Under the Section 8 program, employed residents are required to provide their last four to six consecutive pay stubs to enable the owner/agent to calculate annual employment income.

HUD provides the following conversion schedule to enable the annualization of employment income:

1. Hourly wages by the number of hours worked per year (2,080 hours for full-time employment with a 40-hour week and no overtime)
2. Weekly wages by 52 weeks
3. Bi-weekly wages (paid every other week) by 26 weeks
4. Semi-monthly wages (paid twice each month) by 24 weeks
5. Monthly wages by 12 months
6. To annualize other than full-time income, multiply the wages by the actual number of hours or weeks the person is expected to work.

Differentiating between a bi-weekly (#3) and semi-monthly (#4) payment schedule could be challenging when reviewing pay stubs:

• A bi-weekly payment schedule means the employee is paid every other week, usually on different dates
• A semi-monthly payment schedule means the employee is paid twice each month, usually on the same two dates (for example, the 1^st and 15^th of each month or the 15^th and 30^th or 31^st of each month)

Let’s use the following example to differentiate between bi-weekly and semi-monthly payments:

As you can see, the bi-weekly payments were paid every two weeks on different dates (including three payments in June), whereas the semi-monthly payments were consistently made on the same two dates each month, in this case, on the 1^st and 15^th of June, July, and August.

In addition, the average gross pay of $1,756.39 was annualized over 26 weeks for bi-weekly payments (totaling $45,666.14) and 24 weeks for semi-monthly payments (totaling $42,153.36).

Failing to properly distinguish between bi-weekly and semi-monthly pay periods could result in miscalculation of income and a management review finding.

Daniel Bagliore is a writer and Rental Housing & Quality Assurance Professional.