OAs’ Responsibilities: Obtain accurate income information Verify resident income FACT SHEET Ensure residents receive the exclusions and For HUD ASSISTED RESIDENTS deductions to which they are entitled Accurately calculate Tenant Rent Provide tenants a copy of lease agreement and Section 202/162 – Project Assistance income and rent determinations Contract (PAC) Recalculate rent when changes in family Section 202/811 – Project Rental composition and decreases or increases in income are reported by $200 more per month Assistance Contract (PRAC) Provide information on OA policies upon request Notify residents of any changes in requirements or practices for reporting income or determining rent Residents’ Responsibilities: “HOW YOUR RENT IS Provide accurate family composition information DETERMINED” Report all income Keep copies of papers, forms, and receipts which document income and expenses Office of Housing Report changes in family composition and income occurring between annual recertifications **June 2007** Sign consent forms for income verification Follow lease requirements and house rules This Fact Sheet is a general guide to inform the Income Determinations Owner/Management Agents (OA) and HUD- assisted residents of the responsibilities and rights A family’s anticipated gross income determines not only regarding income disclosure and verification. eligibility for assistance, but also determines the rent a family will pay and the subsidy required. The anticipated income, subject to exclusions and deductions the family will receive during the next twelve (12) months, is used to determine the family’s rent. Why Determining Income and Rent What is Annual Income? Correctly is Important Gross Income – Income Exclusions = Annual Income Department of Housing and Urban Development studies show that many resident families pay incorrect rent. What is Adjusted Income? The main causes of this problem are: Annual Income – Deductions = Adjusted Income Under-reporting of income by resident families, and OAs not granting exclusions and deductions to which resident families are entitled. Determining Tenant Rent OAs and residents all have a responsibility in ensuring The rent a family will pay is the highest of the that the correct rent is paid. following amounts: 30% of the family’s monthly adjusted income 10% of the family’s monthly income Welfare rent or welfare payment from agency to assist family in paying housing costs. Note: An owner may admit an applicant to the PAC All regular pay, special pay and allowances of a program only if the Total Tenant Payment is less than member of the Armed Forces (except for special pay the gross rent. This note does not apply to the PRAC for exposure to hostile fire) program. In some instances under the PRAC program a **For Section 8 programs only, in excess of tenant’s Total Tenant Payment will exceed the PRAC amounts received for tuition, that an individual operating rent (gross rent). receives under the Higher Education Act of 1965, shall be considered income to that individual, except Income and Assets that financial assistance is not considered annual income for persons over the age of 23 with dependent children or if a student is living with his HUD assisted residents are required to report all income or her parents who are receiving section 8 from all sources to the Owner or Agent (OA). assistance. For the purpose of this paragraph, Exclusions to income and deductions are part of the “financial assistance” does not include loan tenant rent process. proceeds for the purpose of determining income.** When determining the amount of income from assets to Assets Include: be included in annual income, the actual income derived from the assets is included except when the cash value Stocks, bonds, Treasury bills, certificates of deposit, of all of the assets is in excess of $5,000, then the money market accounts amount included in annual income is the higher of 2% of Individual retirement and Keogh accounts the total assets or the actual income derived from the Retirement and pension funds assets. Cash held in savings and checking accounts, safe deposit boxes, homes, etc. Annual Income Includes: Cash value of whole life insurance policies available Full amount (before payroll deductions) of wages to the individual before death and salaries, overtime pay, commissions, fees, tips Equity in rental property and other capital and bonuses and other compensation for personal investments services Personal property held as an investment Net income from the operation of a business or Lump sum receipts or one-time receipts profession Mortgage or deed of trust held by an applicant Interest, dividends and other net income of any kind Assets disposed of for less than fair market value. from real or personal property (See Assets Include/Assets Do Not Include below) Assets Do Not Include: Full amount of periodic amounts received from Necessary personal property (clothing, furniture, Social Security, annuities, insurance policies, cars, wedding ring, vehicles specially equipped for retirement funds, pensions, disability or death persons with disabilities) benefits and other similar types of periodic receipts, Interests in Indian trust land including lump-sum amount or prospective monthly Term life insurance policies amounts for the delayed start of a periodic amount Equity in the cooperative unit in which the family **(except for deferred periodic payments of lives supplemental security income and social security Assets that are part of an active business benefits, see Exclusions from annual Income, Assets that are not effectively owned by the below)** applicant Payments in lieu of earnings, such as unemployment or are held in an individual’s name but: and disability compensation, worker’s compensation The assets and any income they earn accrue to and severance pay **(except for lump-sum additions the benefit of someone else who is not a to family assets, see Exclusions from Annual member of the household, and Income, below)** that other person is responsible for income taxes Welfare assistance incurred on income generated by the assets Periodic and determinable allowances, such as Assets that are not accessible to the applicant and alimony and child support payments and regular provide no income to the applicant (Example: A contributions or gifts received from organizations or battered spouse owns a house with her husband. from persons not residing in the dwelling Due to the domestic situation, she receives no 2 income from the asset and cannot convert the asset training of a family member as resident management to cash.) staff Assets disposed of for less than fair market value as Temporary, non-recurring or sporadic income a result of: (including gifts) Foreclosure Reparation payments paid by a foreign government Bankruptcy pursuant to claims filed under the laws of that Divorce or separation agreement if the applicant government by persons who were persecuted during or resident receives important consideration not the Nazi era necessarily in dollars. Earnings in excess of $480 for each full time student 18 years old or older (excluding head of household, Exclusions from Annual Income: co-head or spouse) Income from the employment of children (including Adoption assistance payments in excess of $480 per foster children) under the age of 18 adopted child Payment received for the care of foster children or Deferred periodic payments of supplemental foster adults (usually persons with disabilities, security income and social security benefits that are unrelated to the tenant family, who are unable to received in a lump sum amount or in prospective live alone monthly amounts Lump-sum additions to family assets, such as Amounts received by the family in the form of inheritances, insurance payments (including refunds or rebates under State of local law for payments under health and accident insurance and property taxes paid on the dwelling unit worker’s compensation), capital gains and Amounts paid by a State agency to a family with a settlement for personal or property losses member who has a developmental disability and is Amounts received by the family that are specifically living at home to offset the cost of services and for, or in reimbursement of, the cost of medical equipment needed to keep the developmentally expenses for any family member disabled family member at home Income of a live-in aide **Subject to the inclusion of income for the Section Federally Mandated Exclusions: 8 program for students who are enrolled in an Value of the allotment provided to an eligible institution of higher education under Annual Income household under the Food Stamp Act of 1977 Includes, above,**The full amount of student Payments to Volunteers under the Domestic financial assistance either paid directly to the Volunteer Services Act of 1973 student or to the educational institution Payments received under the Alaska Native Claims The special pay to a family member serving in the Settlement Act Armed Forces who is exposed to hostile fire Income derived from certain submarginal land of the Amounts received under training programs funded US that is held in trust for certain Indian Tribes by HUD Payments or allowances made under the Department Amounts received by a person with a disability that of Health and Human Services’ Low-Income Home are disregarded for a limited time for purposes of Energy Assistance Program Supplemental Security Income eligibility