Annualizing Income - Samples 415-25-05-15-10

(Revised 10/00 ML #2629)

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AVERAGING NOT CALLED FOR:

 

A household of four applies in November. The husband is a self-employed farmer who also cash rents a portion of his land, collecting the rent twice per year. He works during the school year on a contract basis as a bus driver. His wife is recently unemployed and collects unemployment compensation weekly. They have a small amount of savings which earns interest quarterly. Their income is calculated as follows:

 

Farm Income (from most recent IRS: 5000 x 73%) =	$ 3,650.00
Cash Rent ($2,500 x 2) =	5,000.00
Interest Income ($25 x 4) =	100.00
Unemployment Compensation ($50 x 52) =	2,600.00
Bus Driver Wages ($2700 x 73%) =	1,971.00
Total Annualized Income	$13,860.00

 

AVERAGING CALLED FOR (Change of more than $400 per month):

 

A family of three, a woman with two small children, applies on February 5. The woman had worked in December but was laid off in January. She was paid $1,000 in January. The client has received no income in February and none is anticipated. She is starting a new job on March 1. She knows she will be paid $4.25 per hour, but she does not know how many hours she will work each week. Within the 45 days allowed for processing the application, the client provides verification that she has begun receiving regular weekly checks of $170. The calculation would be as follows:

Income received in January ($1,000 x 73%)  =	$ 730
Income received in February   =	0
Income anticipated in March ($680 x 73%)  =	496
Total for three months    =	1,226
Annual income (x 4)    =	$4,904

 

On the other hand, if she had received a check in February for a partial pay period ($100), but her regular hours could not be established until later in March, the calculation would be as follows:

 

Income received in January ($1,000 x 73%) =	$ 730
Income received in February ($100 x 73%) =	73
Income anticipated in March ($680 x 73%) =	496
Total for three months   =	1,299
Annual income (x 4)    =	$5,196

 

If March's income could not reasonably be established within the time allowed, the same amount would be used for March as had been used for February.

If the client's situation calls for more immediate action, see "Emergency Application Procedures," 415-15-05-20.

 

NOTE: A household's income may include sources that must be averaged and also other sources for which averaging is not appropriate. For example, the household above may also receive a cash rent payment from a farm property every November. This amount would be added to the annual income calculated for the averaged sources, to arrive at the household's total annual income. (See Worksheet, SFN 530)