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HUD RHIIP Training

HUD RHIIP Training. Case Study 2: Bennett Family (Public Housing). Bennett Case Study: Process Overview. Topic presentation Students complete case study Using Appendix C, File Review Checklist Worksheets Students review PHA’s HUD 50058

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HUD RHIIP Training

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  1. HUD RHIIP Training Case Study 2: Bennett Family (Public Housing) Chapter 8: Case Study 2- Bennett

  2. Bennett Case Study:Process Overview • Topic presentation • Students complete case study • Using Appendix C, File Review Checklist Worksheets • Students review PHA’s HUD 50058 • Students complete Appendix A, Tenant File Review Checklist • Review correct checklist and HUD 50058 Chapter 8: Case Study 2- Bennett

  3. Bennett Case Study: Topics • Annual Income • Self Employment • Imputed Welfare Income • Imputed Welfare Income and (PH) MEID Chapter 8: Case Study 2- Bennett

  4. Bennett Case Study: Topics • Rent Calculation • Mixed family rent calculation • Income based rent • Flat rent Chapter 8: Case Study 2- Bennett

  5. Self-employment Chapter 8: Case Study 2- Bennett

  6. Self-employment Income • Treat as operation of a business/profession • Count net income Chapter 8: Case Study 2- Bennett

  7. Self-employment Income • Net income is • gross income less • business expenses • interest on loans • depreciation • Use straight line depreciation – see IRS guidelines • withdrawal of cash/assets for reimbursement of family’s investments in the operation Chapter 8: Case Study 2- Bennett

  8. Self-employment Income • Do not deduct expenses for expansion or capital improvements Chapter 8: Case Study 2- Bennett

  9. Self-employment Income • Estimating anticipated income for self-employment may be difficult • Family may not keep formal records • Family could maintain a monthly log of income and expenses for PHA • Use average over a period of 3 or more months Chapter 8: Case Study 2- Bennett

  10. Self-employment Income • Interim recertifications may be required to reflect changing circumstances Chapter 8: Case Study 2- Bennett

  11. Self-employment Income: Example • Mary James sells beauty products door-to-door, on consignment • November/December are biggest sales months but has sales all year long • Has no formal records of income except IRS form 1040 • What should be used to determine annual income? Chapter 8: Case Study 2- Bennett

  12. Self-employment Income: Example • Answer: With no other information available, use the income reflected on her form 1040 as her annual income. Chapter 8: Case Study 2- Bennett

  13. Self-employment Income: • Other IRS Forms applicable to self-employment • Schedule C: Profit or Loss From Business • Schedule E: Supplemental Income and Loss • Schedule F: Profit or Loss from Farming • Copies under reference tabs Chapter 8: Case Study 2- Bennett

  14. IRS Resources – Other IRS Forms • Form 4506: Request for Copy/Transcript of Tax Form • Can order tax return transcript 1040 series during current calendar year and 3 years prior • Verification of nonfiling • Form W-2 Information • Copy of tax forms and all attachments including W-2 • $23 charge for each tax year • Requested items will be sent to taxpayer Chapter 8: Case Study 2- Bennett

  15. IRS Resources – Other IRS Forms • Form 8821: Tax Information Authorization • Can be sent to Appointee (PHA) Chapter 8: Case Study 2- Bennett

  16. IRS Resources – Other IRS Forms • IRS Letter 1722 • Tax account listing • Shows • Filing status • Exemptions claimed • Adjusted gross income • Taxable income • Taxes paid • Family can obtain by calling 1-800-829-1040 Chapter 8: Case Study 2- Bennett

  17. Imputed Welfare Chapter 8: Case Study 2- Bennett

  18. Imputed Welfare Income • Congress has now linked welfare reform to housing reform Chapter 8: Case Study 2- Bennett

  19. Imputed Welfare Income • QHWRA established two situations where PHAs cannot reduce rents when families have welfare benefits reduced • Welfare fraud • Non-compliance with economic self-sufficiency requirements Chapter 8: Case Study 2- Bennett

  20. Imputed Welfare Income • Instead of reducing rent, PHA must “impute” welfare income equal to the amount of reduction in welfare benefits • Only applies to families who are required to participate in economic self-sufficiency activities in order to receive full welfare benefits Chapter 8: Case Study 2- Bennett

  21. Imputed Welfare Income • Does not apply if reason for welfare benefit reduction is: • Expiration of lifetime or other time limits on welfare benefits • Economic self-sufficiency requirements completed but family member cannot find job Chapter 8: Case Study 2- Bennett

  22. Imputed Welfare Income • Does not apply if reason for welfare benefit reduction is… • Noncompliance with a non self-sufficiency requirement • Because of an earlier inadvertent overpayment Chapter 8: Case Study 2- Bennett

  23. Imputed Welfare Income • Verification must be obtained from welfare agency of: • Amount of the welfare reduction • Term of the reduction • Reason for the reduction • Any subsequent changes in the reduction Chapter 8: Case Study 2- Bennett

  24. Imputed Welfare Income • PHA must rely on information provided by welfare agency Chapter 8: Case Study 2- Bennett

  25. Imputed Welfare Income • After verification the PHA is required to compute rent exactly as if the welfare benefit reduction had not occurred, until: • Reduction ceases, or • Resident obtains some additional type of income Chapter 8: Case Study 2- Bennett

  26. Imputed Welfare Income • If the family has imputed welfare benefits and their income from other sources then increases: • the increase offsets (takes the place of) the imputed welfare income instead of simply being added to the family’s overall income • when new income equals or exceeds imputed welfare benefits, imputed welfare is no longer counted Chapter 8: Case Study 2- Bennett

  27. Imputed Welfare Income: Example • Monica Smith’s welfare grant was reduced due to failure to comply with economic self-sufficiency, as verified by welfare agency • Original grant was $500 but is now reduced to $300, for 12 months Chapter 8: Case Study 2- Bennett

  28. Imputed Welfare Income: Example • Original grant was $500 but is now reduced to $300, for 12 months • What is her monthly • Imputed Welfare Benefit • Total Income • counted for rent calculation? Chapter 8: Case Study 2- Bennett

  29. Imputed Welfare Income: Example • Original grant was $500 but is now reduced to $300, for 12 months • What is her monthly: • Imputed Welfare Benefit $200 • Total Income counted for rent calculation $500 Chapter 8: Case Study 2- Bennett

  30. Imputed Welfare Income: Example • Original grant was $500 but is now reduced to $300, for 12 months • Two months later, Monica gets a job earning $150 per month • How will her income be reported? Chapter 8: Case Study 2- Bennett

  31. Imputed Welfare Income: Example • Original grant was $500 but is now reduced to $300, for 12 months • Two months later, Monica gets a job earning $150 per month • How will her income be reported? • $300 Welfare cash payment • $150 Employment income • $ 50 Imputed Welfare Benefit Chapter 8: Case Study 2- Bennett

  32. Imputed Welfare Income: Example • Original grant was $500 but is now reduced to $300, for 12 months • Now, Monica earnings increase to $250/mo • How will her income now be reported? Chapter 8: Case Study 2- Bennett

  33. Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months • Now, Monica earnings increase to $250/mo • How will her income now be reported? • $300 Welfare cash payment • $250 Employment income • $ 0 Imputed Welfare Benefit Chapter 8: Case Study 2- Bennett

  34. Imputed Welfare Income: Example Monica’s total monthly income will increase to $550 because the income increase from employment that occurred after the welfare benefit reduction is greater than the amount of the welfare benefit reduction. Chapter 8: Case Study 2- Bennett

  35. Imputed Welfare Income • A family who has an imputed welfare benefit reduction will never pay less than the rent that was based on the former welfare income Chapter 8: Case Study 2- Bennett

  36. Imputed Welfare Income • If the welfare benefit reduction occurred prior to admission, there is no imputed welfare benefit – the PHA counts only the amount of actual cash benefits received Chapter 8: Case Study 2- Bennett

  37. Imputed Welfare and MEID • Families who have welfare income imputed may qualify for the earned income disallowance when they go to work • Include the imputed welfare income as part of the baseline income (prior to the earned income increase) Chapter 8: Case Study 2- Bennett

  38. Imputed Welfare and MEID - Example • Evelyn Jones’s full monthly welfare benefit was $500 ($6,000/yr) prior to $150 sanction • Evelyn found a job paying $1500 per mo and she qualifies for the earned income disallowance How is Evelyn’s income calculated? Chapter 8: Case Study 2- Bennett

  39. Imputed Welfare and MEID – Example Answer • Answer: The $150 imputed welfare income plus the $350 welfare cash payment make up Monica’s $500 baseline for the disallowance ($6,000 annually) Chapter 8: Case Study 2- Bennett

  40. Imputed Welfare and MEID: Answer • If welfare benefits end after employment: • count first $500 of employment income • exclude the remaining $1000 as the disallowance during full exclusion period ($1,000 is the incremental increase) Chapter 8: Case Study 2- Bennett

  41. Welfare Benefits End After Employment Chapter 8: Case Study 2- Bennett

  42. Answer continued • If welfare (and sanction) continue after employment: • Count $350 welfare plus $150 of employment income (which offsets $150 imputed welfare income), keeping pre-employment income counted at $500, and… Chapter 8: Case Study 2- Bennett

  43. Answer continued • If welfare (and sanction) continue after employment… • Exclude remaining $1350/mo employment income as the disallowance during full exclusion period Chapter 8: Case Study 2- Bennett

  44. Welfare & Sanction Continue After Employment Chapter 8: Case Study 2- Bennett

  45. Mixed FamilyRent Calculation Chapter 8: Case Study 2- Bennett

  46. Mixed Family Rent Calculation • Mixed families are those families comprised of some eligible family members and some ineligible family members Chapter 8: Case Study 2- Bennett

  47. Mixed Family Rent Calculation • Eligible family members may be: • Citizens, including naturalized citizens • Nationals (owe permanent allegiance to USA) • Noncitizens who have eligible immigration status Chapter 8: Case Study 2- Bennett

  48. Mixed Families • Ineligible family members include: • Noncitizen students on a student visa, and their noncitizen family members • Family members choosing not to contend their citizenship status (noncontending members) Chapter 8: Case Study 2- Bennett

  49. Mixed Families • The number of ineligible family members will determine the proration of rent Chapter 8: Case Study 2- Bennett

  50. Prorated Rent Calculation (PH) • Step 1: • Determine TTP as you normally would • Step 2: • Subtract TTP from PHA’s Public Housing maximum rent to get maximum subsidy (if all members were eligible) CFR 5.520 Chapter 8: Case Study 2- Bennett

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