Determination of Family Income for Adults & Youth

Determination of Family Income for Adults & Youth
Welcome to the Department of Economic Opportunity’s WIA Training Series, a series developed to help make Workforce Investment guidance, policies, and rulings easier to understand and implement. This training module assists eligibility staff to gather and verify family income in order to determine whether an applicant is to be considered low-income.

Low income Eligibility Staff must determine whether an Adult or Youth is “low-income” For Youth and Adults, eligibility staff must determine whether the applicant is low income. Low-income status affects whether an applicant may receive WIA services and the extent of those services. For example, at least 95% of youth clients must meet the low-income requirement to be eligible to participate in WIA activities. Whether an adult participates in intensive or training services may depend on whether he or she meets the low-income requirement. There is a WIA requirement that low-income individuals receive priority for WIA services if funds are limited.

“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 Individuals who meet any of the following criteria are “automatically” deemed to be low-income. For those “automatic” individuals, there is no need to determine family income. There are four automatic criteria: The individual receives public cash assistance, or is a member of a family that receives public cash assistance. Common examples include TANF and SSI. The individual is a member of a household that receives Food Stamps, or was determined eligible for Food Stamps, during the 6-month period before application.

“Automatic” Low-Income Status
Homeless Foster Child The other two automatic criteria are: 3. The individual is homeless. 4. The individual is a foster child for whom the State or local government provides assistance.

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

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. One of the WIA definitions for low-income is: 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. We will break down all of the elements of this definition in detail in this presentation

FAMILY INCOME To determine family income, follow several steps:
Determine family composition (size) Gather information about all includable sources of income for each member of the applicant’s family To determine family income, eligibility staff must follow several steps: Determine family composition or number of individuals who are included in the family. Family composition will be explained later in this presentation. Gather information about all includable sources of income for each member of the applicant’s family. There will be a thorough discussion of includable as opposed to excluded income later.

FAMILY INCOME Document all sources of includable income
Calculate the family income for the 6 months prior to application Multiply 6-month income by 2 to get “annualized” income. The next steps include: 3. Documenting all sources of includable income. 4. Calculating the family income for the six months prior to the application date. 5. Multiplying the 6-month income by 2 to obtain an annualized income.

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. Once eligibility staff has gathered and verified family composition or size, this information is recorded in the State Management Information System. Likewise, the annualized family income must be entered in the State MIS. The State MIS will match the individual’s family size and income to data issued by the federal government. The relevant data includes: Poverty Level Lower Living Standard Income Level (LLSIL) These standards will be covered later in this presentation.

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 Under WIA, the term family means two or more persons related by blood, marriage, or decree of court who live in a single residence.

FAMILY COMPOSITION A family is defined as:
A husband and wife (and their dependent children, if applicable) A parent or guardian and dependent children WIA further defines a family as a husband and wife (and their dependent children, if applicable), or a parent or guardian and dependent children.

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 A single individual with no children who is an adult will generally be considered a family of 1. However, a young adult who is a dependent of parents or guardians will be considered a member of the parents or guardians’ family. To be considered a dependent, the individual must be claimed as a dependent on the parent’s income tax return. Generally an unmarried youth with no children will be counted as a member of his parents or guardian’s family. If the youth is determined not to be a dependent family member, the youth may be considered a family of 1.

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 Acceptable documentation for family composition or size include: Birth certificates. Decree of court. Public assistance and social service records. Marriage certificates. Public Housing Authority statements. Telephone verification. A telephone verification must record detailed information, and identify the person who provided the information, along with their relationship to the applicant, and contact information. The applicant’s statement, in limited cases. An applicant statement should list the age and relationship of each family member.

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 AWI issued a memorandum on April 14, 2010 that clarified what is includable and excluded income under WIA. This presentation will not discuss each one of the dozens of income sources discussed in the memo, but instead will highlight the most common ones. The most common sources of includable income include: Wages and salaries before deductions. Net receipts from self employment, including from farming.

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 Additional sources of includable income: Pension or retirement income. This includes military retirement pay and annuity payments from IRAs, KEOUGHs, etc. Alimony. Net rental income. Interest, dividends, royalties, periodic receipts from estates or trusts. Educational assistance and stipends unless they are specifically excluded. Since it is impossible to catalogue all possible sources of income, note that other sources of revenue that are considered reportable income by the IRS must also be included, unless they are specifically excluded as indicated in the April 14 memo.

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 The April 14, 2010 Memorandum also describes sources of income that not counted to determine family income. The most common types of EXCLUDED income include: Military pay and allowances received by a family member on active duty. Disability & death benefits for veterans and eligible persons. Educational benefits for veterans and eligible persons. Social Security Benefits, such as old age, survivors, or disability benefits. Unemployment compensation. Trade Readjustment Allowances Public cash assistance, such as TANF, Supplemental Security Income, emergency assistance. Noncash assistance, such as Food Stamps, school meals, Medicare, Medicaid, housing assistance.

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 Examples of other excluded income: Financial aid under Title IV of the Higher Education Act (PELL Grants, Federal Work Study, Supplemental Educational Opportunity Grants) and needs-based scholarships. Child support, including foster child payments. Capital gains from the sale of an asset. And drawing down an asset, such as withdrawing funds from a bank account. Tax refunds, gifts, or loans. One-time unearned income. A list of potential sources for this type of income is shown in the April 14 memo. WIA training stipends. But note that OJT payments are not training stipends, as they are a wage reimbursement made to an employer. Payments from a Supplemental Needs Trust: a type of special needs trust set up in compliance with state and federal law to provide benefits to persons with disabilities. Non-cash benefits from an employer, such as housing, employer-funded insurance. Any other payment that other federal statutes specifically exclude in determining eligibility for benefits received under any federal statute.

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 Acceptable documentation of family income include: Pay Stubs. Employer Statement or Contact. Tax return, quarterly estimated tax, or business financial records for self-employment income Alimony agreement Pension or annuity statement Telephone verification. The telephone verification must include detailed information about applicant, identify the individual providing the information, their relationship to the applicant or family member, and contact information. An applicant’s statement, in limited cases. An applicant who claims no income must submit a statement that no income was received during the past six months and how the applicant (and family, if applicable) was supported during the six-month period.

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)? We will now look at a scenario to assist in the determination of family income. In this scenario, Matteo, a 22 year-old male applicant lives with his girlfriend and her two children. One of the two children is his child. How many people are to be counted as members of his family according to WIA law?

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. Since the applicant and his girlfriend are not married, she will not be counted as a member of his family. That leaves the applicant and his child. Thus, the answer hinges on whether his child is a dependent for tax purposes. If yes, the family size is 2. If no, the family size is 1.

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? Let’s decide that the applicant’s child is listed on his tax return as his dependent. The income in the household for the last six months consists of: The applicant’s wages of $8,000. Disability benefits from the Veteran’s Administration to the applicant’s girlfriend of $3,600. Child support payments made to the girlfriend for the care of the other child of $4,800. What is the applicant’s family income for the previous six months?

Applicant’s Family Income Six-month income: Matteo’s wages $8,000 Annualized income: $16,000 In our scenario, the only income that would be included is the applicant’s income, since his girlfriend and her other child are not counted as members of his family for WIA the purpose of determining whether he meets the low-income criterion. His income consists of $8,000 wages for six months. This six-month income is then multiplied by two to calculate annualized income. Thus, his annualized income is $16,000.

When determining income, we look at the Poverty Guidelines and the Lower Living Standard Income Level (LLSIL). The reported income amount has to be equal to or lower than the amount listed on the chart. Mostly, urban counties are considered Metro. The remaining counties are Non-Metro. The Department of Economic Opportunity issues an annual update when these data are made available. The DEO communication also identifies the Metro and Non-Metro counties in Florida. Based on the number in the family, we look for the appropriate column (Poverty or 70% LLSIL) to determine if the individual meets the required income eligibility guidelines. AAAAAAAAAAAAAAAAAAAAaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaa

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. The last step is to compare the annualized income to the income standards that apply to his area of residence. Our applicant, Matteo, does not meet the low-income criterion.

We now have a married couple, Ulric and Wendy, with an 18-year old child. Wendy is applying for WIA services. We will now look at a scenario to assist in the determination of family income. In the second scenario, our applicant, Wendy, lives with her husband and has an 18-year old child.

QUIZ 1. How many individuals are counted as members of the applicant’s family (including the applicant)? Pick all possible answers. 1 2 3

QUIZ 1 Correct answer: 2 3 Both are possible answers depending on whether the child is a dependent on the parents’ tax return.

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 The income in the household for the last six months consists of: Ulric’s wages of $8,000. Disability benefits from the Veteran’s Administration to Wendy of $3,600. Social Security Disability Benefits to Wendy of $4,800. What is the applicant’s family income for the previous six months?

QUIZ 2 What is the family income for the previous six months? $8,000 $9,600 $12,200 $15,800

QUIZ 2 Correct answer: $8,000

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 In this scenario, the only income that is included is the applicant’s wages of $8,000 wages for six months. The other two sources of income, veteran’s disability benefits and social security disability, are excluded.

Once again, we compare the family’s annualized income to the poverty/70% of the LLSIL levels to determine whether the family’s income meets the low-income criterion. AAAAAAAAAAAAAAAAAAAAaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa aaaaaa

QUIZ 3 If Wendy’s child is a dependent, does Wendy’s family income meet the low-income requirement? Yes No

QUIZ 3 Correct answer: Yes

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 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 may still be determined to be low income if: The individual’s disability is verified; and The income’s includable income meets the low-income levels. We will take a little time to discuss how to document disability, and then work through one more scenario.

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 Acceptable sources of documentation of an applicant’s disability include: A letter from a drug or alcohol rehabilitation agency. Medical records or a physician’s statement. A psychiatrist’s statement or psychological diagnosis. Workers compensation records. Social Security Administration disability records. Veterans Administration records.

Acceptable Documentation (continued): Social Services Records/Referral Rehabilitation Evaluation School Records Sheltered Workshop Certification Vocational Rehabilitation Letter Applicant Statement, in limited cases Additional records: Social services records or referral. A rehabilitation evaluation. School records, such as an Individual Education Plan (IEP), can be used to document a disability. A sheltered workshop certification. A letter from Vocational Rehabilitation. The applicant’s statement, in limited cases.

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. 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.

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 The income in the household for the last six months consists of: The father’s wages of $18,000. The mother’s self-employment net income of $18,000. Applicant has no income.

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

DETERMINING LOW-INCOME Scenario 3, Individual with Disability
QUIZ 4 Correct answer: a. True Since our applicant, Jai, is disabled, he may be considered a family of 1. As he has not income of his own, he would be considered low-income. The case manager would record his family composition/size as 1 and his family income as $0 in the State MIS.

Questions or Additional Information
Isabelle Potts Government Operations Consultant II Telephone Number: (850) Corey McCaster Telephone Number: (850) Please don’t hesitate to contact one of our WIA policy and technical assistance staff if you need additional information. Thank you.

Determination of Family Income for Adults & Youth

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