6318 Garnished
or Diverted Wages -
Available income shall not be reduced by wage
earner plans, garnishments, income withholding orders and similar
types of income reductions. Such forms of income withholdings are
generally used to meet the individual's previous or ongoing obligations
and are considered available for the purpose of determining cash and
medical eligibility.
Wages earned by a household member that are garnished or diverted by an employer, and are paid to a third party for a household's expenses, such as rent or child support, shall be considered income. However, if the employer pays a household's rent directly to the landlord in addition to paying the household its regular wages, the rent payment shall be excluded as a vendor payment. In addition, if the employer provides housing to an employee, the value of the housing shall not be counted as income.
6319 Family Subsistence Supplemental Allowance (FSSA) - FSSA payments made by the military to certain members of the Armed Forces is considered earned income for all programs. This program was implemented May 1, 2001 and provides certain members of the Armed Forces with a special allowance to partially address the issue of enlisted members relying on food assistance to make ends meet. Qualifying members and their families are eligible for a cash allowance up to $500 per month. The law authorizing the program, Public Law 106-398, does not prohibit members from receiving FSSA benefits and food assistance at the same time. The amount of the FSSA will be shown on the member's Leave and Earnings statement.
6320 Contract Labor - Income earned from an employer which forces the worker to absorb significant expenses in order to remain employed is treated as self-employment income. These positions generally require the employee to enter into a contractual relationship with the employer.
Examples of this type of employment would include a truck driver forced to purchase or lease his own truck, a rural mail carrier who must provide her own vehicle or pay all travel expenses, or an DCF Out-of-Home relative child care provider. This would not apply to In-Home Child Care situations as with these arrangements, the DCF parent is considered the employer of the child care provider (relative or non-relative) coming into the child's home. The presence of additional expenses must be verified and documented. Such expenses must be directly related to the persons employment and required to maintain employment. Expenses cannot be reimbursed. Earnings dependent only upon typical deductions from income (such as state and federal taxes, OASDI, Medicare, and other mandatory or optional deductions) do not meet this criteria. In addition, persons required to incur only nominal expenses, such as mechanics required to purchase their own tools or regular postal employees required to purchase uniforms do not meet this criteria. These situations are to be evaluated on a case-by-case basis. The presence of a contract requiring the employee to provide equipment or cover costs necessary for employment is the primary indicator of income classified as contract labor.
6321 Basic Allowance for Housing (BAH) – The Basic Allowance for Housing (BAH) is a monthly payment made by the military to certain members of the Armed Forces, replacing the Variable Housing Allowance (VHA) and Basic Allowance for Quarters (BAQ). BAH (BAQ or VHA) is countable earned income.
6322 Royalty Income – Royalty income is compensation paid to the owner for the use of property (usually copyrighted material such as books, magazine articles, manuscripts, music, or artwork), or natural resources (such as minerals, oil, gravel, or timber). Royalty compensation is generally expressed as a percentage of receipts from using the property, or as an amount per unit produced from using natural resources.
1. Payments for the use of property – Payments for the use of property are assumed to be royalties.
2. Payments for the use of natural resources – Payments for the use of natural resources will not be considered as royalties unless:
a. There is a formal or informal agreement whereby the owner authorizes another individual to manage and extract a product, and
b. The payment amount is dependent on the amount of the product actually extracted.
Note: An outright sale of natural resources by the owner of the land or by the owner of rights to use the land constitutes conversion of a resource. The proceeds from the conversion of a resource are not income. See 5200(12).
3. Earned income vs. unearned income – Royalty payments are counted as unearned income, unless payments are:
a. Received as part of a trade or business, or
b. Received by an individual in connection with publication of his/her work.
In general, royalty payments for the use of property are considered to be self-employment earned income (see 7122.3). Payments for the use of natural resources are considered unearned income. However, the countable amount of payments for the use of natural resources may be reduced by any severance taxes levied against the production of the resource [see 6410(42)].
Example 1: An author receives monthly payments for publication of books she wrote. Since writing is her trade of business, the payments are considered self-employment earned income. The amount of countable income is based on either her federal tax return or the information provided on the Self-Employment Worksheet, KC-5150.
Example 2: An individual receives quarterly payments from his mineral rights interest in a producing oil well. Since this is not his trade or business, the payments are considered unearned income. However, any severance taxes associated with the oil production may be deducted from the gross payment amount.
Example 3: A musician receives annual payments from a record company for sales from a song she wrote. Since this is her trade or business, the payments are considered self-employment earned income. The amount of countable income is based on either her federal tax return or the information provided on the Self-Employment Worksheet, KC-5150.
Example 4: A landowner sells his timber rights to a logging company that clear cuts the designated acreage and makes a one-time payment to the landowner. This is not a royalty payment. Rather, it is a conversion of property from one form to another (timber to cash). The payment is not considered income in the month received. The payment is considered a resource in the month after the month received.