Quiz: Calculating Income & Applying Income Limits

Here are four questions that test your knowledge—and that of your staff—on calculating annual income and applying correct income limits to applicant households. The answers, along with explanations, follow the quiz. Special thanks to tax credit consultant Karen Graham of Karen A. Graham Consulting LLC for her assistance in reviewing these questions.

QUESTIONS

1. Every year, about 4.4 million children receive monthly benefits because one or both of their parents are disabled, retired, or deceased. When a parent becomes disabled or dies, Social Security benefits help to stabilize a family’s financial situation. In addition, the Social Security Administration pays benefits to qualifying minors through its disability insurance and Supplemental Security Income (SSI) programs. When determining the anticipated annual income of a household, you should include the Social Security benefit paid to minor occupants. True or false?

2. An applicant is a young single parent who receives $75 in groceries delivered weekly from a relative. The applicant also has a recurring gift of $250 that’s deposited monthly into a bank account. When determining the annual income of this household, the correct annual income is:

a. $7,200

b. $3,600

c. $3,000

d. $2,100

3. A single parent of two is applying for an apartment at your site. Her 20-year-old daughter is away at college and she comes home for the summer and school recesses. The applicant’s son is 8 years old and lives with his father but stays with the applicant every other weekend. What income limit should be applied?

1. 1-person limit
2. 2-person limit
3. 3-person limit
4. 4-person limit

4. A couple is applying for an apartment at your LIHTC site. The wife is pregnant and the husband’s daughter from his first marriage will be living with them 50 percent of the year. What income limit should be applied?

1. 1-person limit
2. 2-person limit
3. 3-person limit
4. 4-person limit

ANSWERS

1. True. HUD Handbook 4350.3, par. 5-6(I) says for periodic Social Security payments, you count the gross amount, before deductions for Medicare, etc. You would include payments received by adults on behalf of individuals under the age of 18 or by individuals under the age of 18 for their own support.

2. b. $3,000. The weekly amount of groceries is exempt. Groceries and/or contributions paid directly to the childcare provider by persons not living in the unit are excluded from annual income [HUD Handbook 4350.3, par. 5-6(G)(2)]. However, the recurring cash deposit into the applicant’s bank account is a verifiable cash contribution and must be included as income to the household. If it was temporary, nonrecurring, or sporadic income, it would not be counted [HUD Handbook 4350.3, par. 5-6(G)(3)].

3. b. 2-person income limit. The applicant counts as the head of household. Her daughter is considered a temporarily absent member of the household while she’s away at college. HUD says children who are away at school but who live with the family during school recesses are included when determining family size for income limits [HUD Handbook 4350.3, par. 3-6(E)(4)(c)]. The applicant’s son should not be counted as a household member because he doesn’t physically reside with her at least 50 percent of the time. Children in joint custody arrangements who are present in the household 50 percent or more of the time are included when determining family size for income limits [HUD Handbook 4350.3, par. 3-6(E)(4)(b)].

4. d. 4-person limit. The HUD Handbook requires you to count household members’ unborn children as part of a low-income household for occupancy and income purposes [Handbook 4350.3, par. 3-6(E)(4)(d)]. You should also include the husband’s daughter because she will be living with them 50 percent of the year. Children in joint custody arrangements who are present in the household 50 percent or more of the time are included when determining family size for income limits [HUD Handbook 4350.3, par. 3-6(E)(4)(b)].