– Income That Counts

– Income That Counts A. The following is not an exhaustive list of the types of income that counts but is meant to cover the types most commonly encountered If not addressed herein, Internal Revenue Service (IRS) tax rules provide the governing policy. 1. Employee Compensation includes all things received in payment for personal services, such as wages, salaries, commissions, fees, bonuses, tips, severance pay, sick pay paid by an employer while out on sick leave and backpay awards. Employment income that counts is the gross income prior to any payroll deductions. 2. Volunteer Income. The treatment of income received as a volunteer is as follows: a) Peace Corp – living allowances paid to the volunteer for housing, utilities, supplies, food and clothing are not counted as income. Countable wages include allowances paid to a spouse and minor children while the volunteer is a volunteer leader training in the U.S.; living allowances designated as basic compensation; leave allowances and readjustment allowances. b) VISTA (Volunteers in Service to America) – meal and lodging allowances paid to the volunteer are counted as wages. c) AmeriCorps education awards and living allowances are countable income. d) National Senior Service Corps programs, include the RSVP or Retired Senior Volunteer Program, Foster Grandparent Program, and Senior Companion Program. Income received for supportive services or reimbursements for out- of-pocket expenses are not counted as income. 3. Military Pay – payments received as a member of a military service are wages. Military retirement benefits are treated as pensions. Allowances, such as a basic allowance for housing or subsistence, are generally not taxable income and do not count as income. 4. Self-Employment – for IRS purposes, an individual is considered to be self-employed if the individual has a trade or business as a sole proprietor, an independent contractor, is a member of a partnership that carries on a trade or business or is otherwise in business for himself/herself, including a part-time business. Self-employment is business income less allowable business expenses that results in a net profit or loss. Net profit counts as income. Annualize the income to arrive at a monthly countable amount provided the business has been in existence for a twelve (12) month period. Annualize even if the income is received over a short period of time during the year unless the business is designed to be seasonal, such as a summer business that operates only three (3) months out of the year. Such business income would be averaged over the period of time the business covers. If a business has been in existence less than a full taxable year, average over the period of time the business has been in existence. a) Partnership income – each partner’s distributive share of profit counts as self- employment income which is annualized. 5. Rental Income – countable income includes the net proceeds after allowing all IRS allowed deductions for rental income. 6. Farm Income – farm income that counts is the net earnings or profit that remains after allowing all IRS allowed business expenses involved in raising livestock, poultry or fish or from the growing of fruits or vegetables. Farm income is annualized or averaged over the time the farming business operates, as appropriate. 7. Royalties from copyrights, patents and oil, gas and mineral properties are taxable income and therefore countable. 8. Unemployment Compensation – all unemployment compensation benefits are countable as income. 9. Retirement, Survivors and Disability Insurance (RSDI) or benefits paid by the Social Security Administration are only partially taxable as income under certain conditions but are fully countable as income for insurance affordability programs. 10. Alimony payments received from divorce or separation agreements finalized on or before December 31, 2018, are countable as income to the divorced or separated spouse receiving the payment. Alimony payments received from divorce or separation agreements finalized after December 31, 2018, are not countable income. 11. Annuities – payments from annuities are countable as income. 12. Pensions and Retirement benefits are countable as income, including pensions paid by any private, municipal, county, state or federal plan. 13. Estate and trust income is countable income when distributed or when it should have been distributed, regardless of whether it was actually distributed. 14. Gambling, Lotteries and Raffle Winnings – cash winnings are countable income in the month received. Lottery and gambling winnings of eighty thousand dollars ($80,000) or greater that require lump sum winnings are not only counted as unearned income in the month received, but for the person receiving the lump sum (the winner), it is counted as income up to one hundred and twenty (120) months, depending on the amount of the winnings. The only person potentially impacted beyond the month of receipt of lump sum is the lottery or gambling winner. Otherwise, a lump sum received under this provision continues to count in month of receipt only for household members. 15. Jury duty pay is countable as income. 16. Alternative trade adjustment assistance (ATAA) payments received from a state agency under the Demonstration Project for Alternative Trade Adjustment Assistance for Older Workers is countable as income. 17. Interest income, including tax-exempt interest, is countable under MAGI rules. 18. Disability benefits received through an accident or health insurance plan – the IRS rules for counting such benefits are as follows: a) If both the individual and the employer paid the premiums for the plan, only the amount received for disability that is due to the employer’s payments is countable as income, b) If the individual paid the entire cost of the plan, the payments are not countable as income, c) If the premiums of a plan were paid through a cafeteria plan and the amount of the premium was not taxable income to the individual, the premiums are considered paid by the employer and the disability payments are countable as income.