Shelter Deductions Volume II, MS 5470

Shelter Expenses Are: Expenses incurred to occupy a given shelter or leading to ownership of shelter, including: mortgage, rent, property taxes and insurance, etc.Expenses incurred to occupy a given shelter or leading to ownership of shelter, including: mortgage, rent, property taxes and insurance, etc. Expenses for utilities at the residence, such as: heating, cooling, water, and telephone, etc.Expenses for utilities at the residence, such as: heating, cooling, water, and telephone, etc.

Limitations Remember that the Shelter Deduction is limited to only shelter costs that are in excess of 50% of the household's income after all other deductions are applied. There’s an example of this on the next slide...

Example Net Income (after deductions):$ Shelter Expenses : $ Half (50%) of Net income :- $ Excess Shelter Costs : $ Since the excess is less than the Shelter Maximum, the deduction will be $

Shelter Maximum After excess shelter costs are calculated, KAMES will not allow a deduction which exceeds the Maximum. Exception: –The shelter maximum does not apply to households with elderly or disabled members. –So, be sure to answer questions regarding age and disability correctly on KAMES!

Allowable Shelter Deductions Allow shelter expenses as billed or otherwise become due. When do we request Verification? –At application and recertification –Interim change if a shelter increase would increase the benefit allotment.

Rent Expense Request information from the landlord or documentation, such as a current lease, to verify the current monthly rent expense. Do not include past due amounts as part of the ongoing rent deduction. The next slide shows KAMES system entry for Rent...

Rent Expense on KAMES Enter the client stated amount of rent, and the time period it covers. (Usually monthly) Enter “ R ” for rent in the “ Type ” field. Enter the verified amount of rent, and the verification source code. If verification is not available at the time of application, leave both of these fields blank

Mortgage Expenses Request documentation from the lender listing costs included in the mortgage payment. –Do not consider credit life as part of the mortgage deduction. –Do not include amounts paid to an escrow account, because taxes and insurance are listed separately on KAMES.

Mortgage Payment Example Mortgage costs include: –Principle and Interest: $ –Payment to Escrow: $ –Credit Life Insurance:+ $25.00 –Total Payment: $ Subtract the Credit Life and the Escrow payment, before entering on KAMES. Entry on KAMES: $450.00

Property Taxes Allow the actual property taxes, not the discounted or penalty amount. Example: The base tax bill amount is $845.00, and this payment is due by 10/31. –If paid prior to 9/30, they only pay $ –If not paid by 10/31, they must pay $ Entry on KAMES: $845.00

Insurance Allow the insurance on the shelter structure itself and state and local taxes, assessments, and the 1.5% surcharge mandated by the State of Kentucky.Allow the insurance on the shelter structure itself and state and local taxes, assessments, and the 1.5% surcharge mandated by the State of Kentucky. Do not allow amounts paid for coverage on furniture or personal property or surcharges imposed by the company.Do not allow amounts paid for coverage on furniture or personal property or surcharges imposed by the company.

Insurance Example Total Yearly Bill:$ –Coverage on Furniture: $90.00 –Personal Property Coverage: $45.00 –Company Billing Charge:- $12.00 Allowable Deduction: $ The next slides show KAMES system entry for Mortgage, Taxes and Insurance...

Mortgage, Taxes and Insurance Enter the client stated amount of mortgage, and the time period it covers. (Usually monthly) Enter “ M ” for Mortgage in the “ Type ” field. Enter the verified amount, and the verification source code. If verification is not available at the time of application, leave both of these fields blank

Mortgage, Taxes and Insurance Enter the client stated amounts for taxes and insurance, and the time period they cover. (Usually yearly for these expenses) Note : If more than 2 bills are received for either mortgage or tax and insurance, it may be necessary to combine expenses on this screen. If so, be sure to document comments on how you combined expenses. Enter the verified amounts, and the verification source codes. If verification is not available at the time of application, leave both of these fields blank. 4 5

Shelter Costs for Unoccupied Home Only allow these as a deduction IF the home is temporarily unoccupied due to one of the following reasons: –Employment –Job training away from home –Illness –Abandonment caused by a natural disaster or casualty loss

Self-Employment Shelter Households running a self-employment enterprise from their home have many options, depending on the situation. The expenses may be considered as a business expense or a shelter deduction. Go to MS 5470, and review item E, which explains all of the options... MS 5470MS 5470

Repairs to the Home Allow these expenses when the home was substantially damaged or destroyed due to a natural disaster, such as fire or flood, which have not or will not be reimbursed.

Utility Expenses In addition to ongoing expenses, allow fees charged by the utility provider for initial installation or initial turn-on of the utility or the rental fee for a propane tank.

SUA: Standard Utility Allowance Households which incur out-of-pocket heating or air conditioning costs, or receive HEAP, must use the SUA. These households cannot use their actual utility expenses. The next slides show KAMES system entry to use the SUA...

Answer “ Y ” to “Are you billed for any of the following utilities?” Do NOT enter any actual amounts. Skip these fields!  “ N ” to “Are you billed for a telephone expense?”  “ Y ” to “ Are you billed for primary heating/air…? ”  “ N ” to “Is household receiving or been approved for HEAP…?”  “ Y ” to “ Is this household entitled to take the SUA? ”  Enter “ WS ”, “ OR ” or “ RE ” for verification source code:  “ N ” for “Is this household entitled to take the BUA?” SUA Due to Heating/Cooling

Answer “ Y ” to “Are you billed for any of the following utilities?” Do NOT enter any actual amounts. Skip these fields!  “ N ” to “Are you billed for a telephone expense?”  “ Y ” or “ N ” to “ Are you billed for primary heating/air…? ”  “ Y ” to “Is household receiving or been approved for HEAP…?”  “ Y ” to “ Is this household entitled to take the SUA? ”  Enter “ OR ” for verification source code: (HEAP Master report)  “ N ” for “Is this household entitled to take the BUA?” SUA Due to HEAP

BUA: Basic Utility Allowance Households which incur at least two utility expenses which are not heating or cooling costs, must use the BUA. Examples : Phone, Electricity, Water or Sewage, Garbage or Trash, or Cooking Fuel. The next slide shows KAMES system entry to use the BUA...

Answer “ Y ” to “Are you billed for any of the following utilities?” Do NOT enter any actual amounts. Skip these fields!  “ N ” to “Are you billed for a telephone expense?”  “ N ” to “Are you billed for primary heating/air…?”  “ N ” to “Is household receiving or been approved for HEAP…?”  “ N ” to “Is this household entitled to take the SUA?”  “ Y ” for “Is this household entitled to take the BUA?”  Enter “ WS ”, “ OR ” or “ RE ” for “ verification source code: ” BUA on KAMES

Phone Standard If the only utility expense incurred by the household is a telephone bill, use the Phone Standard deduction. This deduction is a basic rate given regardless of actual telephone costs. The next slide shows KAMES system entry for the Phone Standard...

Answer “ N ” to “Are you billed for any of the following utilities?” Do NOT enter any actual amounts. Skip these fields!  “ Y ” to “ Are you billed for a telephone expense? ”  Enter “ WS ”, “ OR ” or “ RE ” for “ verification source code: ”  “ N ” to all remaining questions on this screen Phone Standard on KAMES

Actual Utility Expenses Only households who are not entitled to use the SUA or BUA are allowed to use the actual utility expense. This would occur when the HH incurs only one expense, and it is not phone. The next slide shows KAMES system entry for the Actual Utilities...

Answer “ Y ” to “Are you billed for any of the following utilities?” Enter actual amounts for utilities. “ N ” to all remaining questions. 1 2 Actual Utilities on KAMES Enter verified amounts and verification source 3 4

How do you know which utility deduction or allowance to use? Please return to Blackboard, and review the tip sheet for “ Utility Allowances ”. You might want to print this document to help you apply this policy...

Take a Trip! Access your KAMES Eligibility Tables and locate the current amounts for the SUA, BUA, and the Phone Standard. Write these amounts in the spaces provided in your Notes Pages...

Disallowable Shelter Costs Once again, take a trip to the, and go to Volume II.Once again, take a trip to the Online Policy Manual, and go to Volume II. Online Policy Manual Locate the Manual Section that deals with “ Disallowable Shelter Costs ”, and use it to fill in the blanks on your Notes Pages.Locate the Manual Section that deals with “ Disallowable Shelter Costs ”, and use it to fill in the blanks on your Notes Pages.

Are you ready to test your knowledge? Please return to Blackboard, and complete the “SUA, BUA or Actual Expenses Activity”.