Annual income is an important factor that influences the eligibility of an applicant for the tax credit program. To become income eligible, an applicant's household gross annual income must be equal to or less than the income limit applicable to your site.
Wages and salaries. The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services.Net income from operation of a business or profession. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
On Dec. 1, HUD released income limits for 2012. Under the Housing and Economic Recovery Act of 2008 (HERA), income limits are used to determine qualification levels as well as set maximum rental rates for projects funded with low-income housing tax credits and projects financed with tax-exempt housing bonds. These projects are referred to by HUD as Multifamily Tax Subsidy Projects (MTSPs) and are calculated and presented separately from the Section 8 income limits.
When determining an applicant's eligibility, tax credit managers often can be thrown by HUD Section 8 regulations for income and asset identification that seem to conflict with certain provisions in the tax credit regulations. Jo Ikelheimer, research & development consultant and compliance trainer for the National Center for Housing Management (NCHM), points out these discrepancies in her Tax Credit Specialist training course, as well as in her ongoing article series in the Compliance Corner blog on the NCHM Web site.
If you own or manage a tax credit site, there may have been times when you had trouble deciding whether to count an investment or retirement account as income or an asset. That's probably because of the inconsistencies that appear in HUD's Occupancy Handbook 4350.3, REV-1, CHG-2, explains affordable housing consultant Elizabeth Moreland, an expert in HUD rules.For example, Chapter 5, Paragraph 5-6, Section O, page 5-16, which discusses withdrawal of cash or assets from an investment, seems to contradict other regulations contained in the same chapter.
The recently issued Change 2 to HUD Handbook 4350.3 does not address how you, as an owner or manager, calculate annual income by using year-to-date (YTD) income.
