Determination of Family Income for Adults & Youth 1

Low income Eligibility Staff must determine whether an Adult or Youth is “low-income” 2

“Automatic” Low-Income Status “Automatic” low-income criteria:  Individual/family receives public cash assistance  Individual is a member of household that receives Food Stamps or is determined eligible for Food Stamps during the 6- month period prior to application 3

“Automatic” Low-Income Status  Homeless  Foster Child 4

FAMILY INCOME If an Adult or Youth is not determined low-income under one of the automatic criteria, eligibility staff must record and document family income. 5

FAMILY INCOME WIA Definition An individual who received an income, or is a member of a family that received a total family income, for the 6-month period prior to application that, in relation to family size, does not exceed the higher of –  The poverty line, for an equivalent period; or  70 percent of the lower living standard income level, for an equivalent period is considered low-income. 6

FAMILY INCOME To determine family income, follow several steps: 1. Determine family composition (size) 2. Gather information about all includable sources of income for each member of the applicant’s family 7

FAMILY INCOME 3. Document all sources of includable income 4. Calculate the family income for the 6 months prior to application 5. Multiply 6-month income by 2 to get “annualized” income. 8

FAMILY INCOME Recording family income in the State Management Information System (MIS)  Record family size  Record annualized family income  Compare family income/family size to Federal poverty/LLSIL guidelines Note: the State MIS will automatically match family size/income to determine whether the applicant is low income. 9

FAMILY COMPOSITION Under WIA, a family is composed of  individuals who are related by blood, marriage, or court decree  who live in a single residence 10

FAMILY COMPOSITION A family is defined as:  A husband and wife (and their dependent children, if applicable)  A parent or guardian and dependent children 11

FAMILY COMPOSITION Unmarried individuals with no children: Adult is generally considered family of 1 Youth generally counted as member of parent(s)’s or guardian’s family “Dependency” follows IRS guidelines 12

VERIFICATION OF FAMILY COMPOSITION To verify family composition (size), the following records may be used:  Birth Certificates  Decree of Court  Public Assistance/Social Service Records  Marriage Certificate  Public Housing Authority  Telephone Verification  Applicant Statement in limited cases 13

INCLUDABLE INCOME The Agency for Workforce Innovation (AWI) issued a Memorandum on April 14, 2010 that clarified what is includable and excluded income under WIA. Some of the most common sources of INCLUDABLE income are: $Wages and salaries before deductions $Net receipts from self employment, including from farming 14

INCLUDABLE INCOME $Pension or retirement income $Alimony $Net rental income $Interest, dividends, royalties, periodic receipts from estate or trust $Educational assistance and training stipends (unless specifically excluded) $Other sources of revenue considered reportable income by the IRS 15

EXCLUDED INCOME The April 14, 2010 Memorandum also describes sources of income that are not counted to determine family income. The most common types of EXCLUDED income include:  Military pay and allowances while on active duty  Disability & death benefits for veterans and eligible persons  Educational benefits for veterans and eligible persons  Social Security Benefits  Unemployment compensation and Trade Readjustment Allowances  Public cash assistance & noncash assistance 16

17 EXCLUDED INCOME  Needs-based scholarships and financial aid  Child support  Capital gains, asset draw-down  Tax refunds, gifts, loans  One-time unearned income  WIA training stipends  Payments from a Supplemental Needs Trust (special needs trust)  Non-cash benefits from employer  Any payment that is specifically excludable under federal law

18 VERIFICATION OF FAMILY INCOME Acceptable Documentation of Family Income:  Pay Stubs  Employer Statement/Contact  Tax Return or Quarterly Estimated Tax (for Self-Employment)  Business Financial Records (for Self- Employment)  Alimony Agreement  Pension/Annuity Statement  Telephone Verification  Applicant’s Statement, in limited cases

19 DETERMINING LOW-INCOME Scenario 1 – Family Composition Matteo, a 22 year-old applicant lives with his girlfriend, Roxanna, and her two children, one of which is his. How many individuals are counted as members of his family (including the applicant)?

20 DETERMINING LOW-INCOME Scenario 1 – Family Composition Answer: It depends on whether his child is considered to be his dependent for tax purposes. * If dependent, the family size is 2. * If not dependent, the family size is 1.

21 DETERMINING LOW-INCOME Scenario 1 – Family Income We have determined that Matteo’s child is listed on his tax return as his dependent. The income in the household for the last six months consists of: Matteo’s wages: $8,000 Disability benefits from VA to Roxanna: $3,600 Child support payments to Roxanna for care of the other child: $4,800 What is the applicant’s family income for the previous six months?

22 DETERMINING LOW-INCOME Scenario 1 – Family Income Applicant’s Family Income Six-month income: Matteo’s wages$8,000 Annualized income:$16,000

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24 DETERMINING LOW-INCOME Scenario 1 – Low Income? Last Step: Determining whether the applicant’s annualized income is below the higher of:  the Poverty Level, or  70% of the LLSIL In 2009, for a family of 2, the following income levels applied: Poverty$14,570 70% LLSIL (Metro)$13,630 70% LLSIL (Non-Metro)$13,353 This applicant did not meet the low- income criterion.

25 DETERMINING LOW-INCOME Scenario 2 – Family Composition We now have a married couple, Ulric and Wendy, with an 18-year old child. Wendy is applying for WIA services.

26 DETERMINING LOW-INCOME Scenario 2 – Family Composition QUIZ 1. How many individuals are counted as members of the applicant’s family (including the applicant)? Pick all possible answers. a. 1 b. 2 c. 3

27 DETERMINING LOW-INCOME Scenario 2 – Family Composition QUIZ 1 Correct answer: b. 2 c. 3 Both are possible answers depending on whether the child is a dependent on the parents’ tax return.

28 DETERMINING LOW-INCOME Scenario 2 – Family Income The income in the household for the last six months consists of: Ulric’s wages of $8,000 Disability benefits from VA to Wendy (applicant) of $3,600 Social Security Disability Benefits to Wendy of $4,800

29 DETERMINING LOW-INCOME Scenario 2 – Family Income QUIZ 2 What is the family income for the previous six months? a.$8,000 b.$9,600 c.$12,200 d.$15,800

30 DETERMINING LOW-INCOME Scenario 2 – Family Income QUIZ 2 Correct answer: a.$8,000

31 DETERMINING LOW-INCOME Scenario 2 – Family Income Includable Family Income Six-month income: Husband’s wages $8,000 Annualized income: $16,000 Excluded Income Veteran’s disability benefits$3,600 Social Security Disability$4,200

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33 DETERMINING LOW-INCOME Scenario 2 – Low Income? QUIZ 3 If Wendy’s child is a dependent, does Wendy’s family income meet the low- income requirement? a. Yes b. No

DETERMINING LOW-INCOME Scenario 2 – Low Income? QUIZ 3 Correct answer: a. Yes 34

Individuals with a Disability WIA provides an additional mechanism for determining an applicant to be “low-income”. This mechanism applies to an individual with a disability who does not meet any of the “automatic” low-income criteria and whose family income exceeds the low-income levels. The applicant may still be determined to be low income if: The individual’s disability is verified, and The individual’s own includable income meets the low-income levels 35

36 Individuals with a Disability Acceptable sources of documentation of disability:  Letter from a Drug or Alcohol Rehabilitation Agency  Medical Records/Physician’s Statement  Psychiatrist’s Statement  Psychologist Diagnosis  Workers Compensation Records  Social Security Administration Disability Records  Veterans Administration Records

37 Individuals with a Disability Acceptable Documentation (continued):  Social Services Records/Referral  Rehabilitation Evaluation  School Records  Sheltered Workshop Certification  Vocational Rehabilitation Letter  Applicant Statement, in limited cases

DETERMINING LOW-INCOME Scenario 3 – Family Composition Our new applicant, Jai, is an 18 year old who has been diagnosed with cerebral palsy. Jai lives with and is supported by his parents. He has no siblings. 38

39 DETERMINING LOW-INCOME Scenario 3 – Family Income The income in the household for the last six months consists of: Father’s wages of $18,000 Mother’s self-employment net income of $18,000 Applicant has no income

40 DETERMINING LOW-INCOME Scenario 3, Individual with Disability QUIZ 4 The applicant meets the low-income criterion. a. True b. False

41 DETERMINING LOW-INCOME Scenario 3, Individual with Disability QUIZ 4 Correct answer: a. True

Questions or Additional Information If you have any questions or for additional information, please contact DEO’s WIA policy and technical assistance staff at: