Income Eligibility Requirements
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This section discusses financial guidelines used to determine income eligibility.
Policy
Eligibility for benefits is determined using the circumstances of each budgetary unit. When participants receive income, income eligibility is determined using federal and state laws, regulations, and guidelines.
The Federal Poverty Level (FPL) standards are used to calculate budgets to determine eligibility for FAA programs. The maximum gross monthly income limits are set using specified percentages of the FPL. For more information on income standards, see FPL Income Standards.
The income of each budgetary unit member is reviewed and budgeted to determine whether the income of the budgetary unit is within the applicable rules and regulations.
The type of income a participant is receiving determines whether the income is countable or not countable. A budget is completed to identify the countable income used to complete the gross and net income tests. Gross and net income tests are performed to determine income eligibility.
For more information regarding income limits and income tests, see Determining Benefits.
Special consideration to the income of a participant(g) who is in the budgetary unit but whose needs are not included in the budgetary unit is outlined in any of the following and applies all types of income:
NA Income Eligibility
The U.S. Department of Agriculture (USDA), Food and Nutrition Service (FNS) provide guidelines and income eligibility standards to be used by State agencies in determining the income eligibility of persons applying to participate in the NA program.
A budget is completed to determine gross and net income. A budgetary unit's gross and net income has to be equal to or less than the appropriate income standards. For more information on determining eligibility and income limits for NA, see Determining NA Benefits.
CA Income Eligibility
CA income standards contain information on income maximums, need criteria, and payment standards.
Under Title IV-A of the Social Security Act, federal funds are available in block grants to states for the purpose of providing temporary CA to needy families with eligible dependent children.
The countable income of the budgetary unit cannot exceed the applicable payment standard. For more information on determining eligibility and income limits for CA, see Determining CA Benefits.
Earned Income
Earned income is received as wages, salaries, commissions, or profit. Earned income may be received through employment or self-employment and is countable or not countable according to program policies that may differ.
Gross earned income before deductions is counted, unless otherwise specified, when determining eligibility for benefits. Gross income means income before any deductions such as income taxes, Social Security taxes, insurance premiums, charitable contributions, bonds etc.
For more information on the different types of earned income and whether income is countable or not countable, see Income Types. When a type of income is not listed in earned income types, see wages and salaries. For information on deductions from income, see NA Income Deductions and CA Earned Income Deductions.
Unearned Income
Unearned income is income received from sources other than any of the following:
●Employment Income
●Self-Employment Income
●Nonmonetary or In-Kind Income
●Educational Income
The source of the unearned income determines whether the income is countable or not countable.
All income available to the budgetary unit is considered when determining eligibility.
Self-Employment Income
Self-employment is defined as working for oneself rather than working for an employer. Participants who are self-employed generally file federal income tax returns that identify their self-employment status. Self-employment income is reduced by a standard deduction when there are allowable self-employment expenses. (For information on self-employment expenses, see self-employment expense deduction and allowable self-employment expenses.)
Self-employment may include, and is not limited to all of the following situations:
●Income received directly from one's own business, a sole proprietorship, as an independent contractor, or as a member of a partnership.
●Income received from odd jobs or from irregular and varied activities.
●Income received from providing services.
●Income received from selling or reselling goods, including personal property and items purchased for the purpose of resale.
●Income received from working for others on a commission or piecework basis.
When determining whether income meets the self-employment definition, FAA considers all factors relating to the income source. The factors to consider, include and are not limited to all of the following:
●The participant’s intention is to make a profit or produce income as a regular occupation.
●The participant uses the income for their livelihood.
●The participant represents to others as being engaged in a business of selling goods or providing a service.
●The participant is available to take on additional clients.
●The participant has documentation that supports their claim of self-employment.
●The participant is a member of a business or trade association.
●The participant does not have an employer - employee relationship. (See Wages and Salaries for additional information on an employer - employee relationship)
When a participant does not meet the definition of self-employment, see Income Types.
Allowable Self-Employment Expenses
The participant is eligible for the self-employment expense deduction amount when one allowable self-employment expense is verified.
Self-employment income due to farming uses actual expenses and has special budgeting procedures. (See Farming Income for more information)
The allowable self-employment expenses include, and are not limited to all of the following:
●Actual Transportation Costs or the Mileage Standard
●Bills for cleaning costs and maintenance of business location and necessary equipment
●Business related insurance premiums
●Costs of operating machinery or equipment
●Costs of stocks or inventories
●Identifiable rent and utilities that cannot be allowed in the participant's shelter deduction, as they are associated with a business location
NOTE When rental property used in the business does not have a separate meter, utility expenses may be used to determine the cost of doing business.
●Interest and principal paid on the purchase of any of the following:
Business property
Capital assets (Considered Capital Gains)
Equipment
Income producing real estate property
Machinery
Other durable goods
●Interest paid on income producing property
●Labor
●Livestock, raw material, seed, and fertilizer
●Rent or property taxes on the business property
●Other documented costs not listed in Not Allowable Self-Employment Expenses
●Salaries paid to employees, and employer paid benefits
●Taxes paid on income producing property
●Sales taxes collected and paid, when applicable
FAA verifies the expense before allowing the expense as a deduction.
Not Allowable Self-Employment Expenses
Costs and expenses of producing self-employment income that are not allowable include, and are not limited to, all of the following:
●Products purchased with NA benefits (See NA Trafficking)
●Depreciation/Depletion
●Meals/Entertainment expenses
●Federal, state, and local income taxes
●Money set aside for retirement purposes
●Net losses from previous periods
●Other work-related personal expenses such as transportation to and from work
●Interest payments (other than mortgage interest)
Verification
The participant has the primary responsibility for providing verification. (See Participant Responsibilities – Providing Verification for additional policy.)
For NA, all of the following income is required to be verified before eligibility is determined:
●Reported on a new application, during the interview of a new application, or changes reported before the eligibility determination of a new application.
●Changes after an eligibility determination of a new application (e.g., a renewal application, mid approval contact, etc.) and any of the following apply:
The source of the income has changed.
The income is questionable(g) or unclear(g).
The reported income amount has changed by $51 or more.
The previous verification in the case file is more than 59 calendar days old.
For CA, all income is required to be verified before determining eligibility.
Earned Income Verification Sources
Examples of verification that can be used for earned income include, and are not limited to, any of the following:
●System interface(g) when the participant agrees that the information is accurate.
●A copy of a paycheck stub.
●Copy of checks when the gross earnings are listed.
●A printout from a third-party payroll verification source provided by the participant.
●Third-party payroll verification sources when the employer uses the verification source as its legal agent to provide payroll services or respond to inquiries about employee records. (See Third-Party Payroll Verification Sources(g) for FAA approved sources, additional information, and instructions for requesting additional sources.)
●A New Employment Verification (C005) notice that is completed, dated, and signed by the employer or their payroll authority. To be considered complete, the statement has to include all of the following:
Name, address, and telephone number of the employer
Gross pay for the periods needed
Frequency of pay (e.g., weekly, monthly, quarterly, etc.)
Day of the week or day of the month pay is received (e.g., Fridays, 5th and 20th of the month, first of the month, etc.)
Any expected change in pay
●For new or current employment verification, a completed Verification of New/Current Employment (FAA‑0053A) form that includes a date and the signature of the employer or their payroll authority.
●For terminated employment verification, any of the following completed items that include a date and the signature of the employer or their payroll authority:
Verification of Terminated Employment (FAA-1701A) form
Verification of Terminated Employment (C019) notice
●Letter from the agency providing government-sponsored training.
●Leave and Earnings Statement (LES) from the military.
●A collateral contact with the employer or their payroll authority.
NOTE Collateral contact is not used when contacting the employer would jeopardize the participant's employment or when the employer does not accept telephone verification.
●Participant statement verification when any of the following occur:
Other attempts to obtain verification have failed
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
NOTE A participant’s statement is not allowed to verify income when it is considered questionable.
Unearned Income Verification Sources
Examples of verification that can be used for unearned income include, and are not limited to, any of the following:
●Assistance payments records
●Benefit award letters from the Social Security Administration (SSA), VA Statement of Earnings, and other agencies
●Bank records
●Court records or court orders
●DCSS documents or print outs
●Divorce or separation papers or contact with the Clerk of the Court
●Current check reflecting gross income
●Federal or state tax forms
●Insurance policies
●Mortgages and Sales Contracts
●Signed statement from the agency or payer providing the income
●Unemployment Insurance records
●Absent parent statement
Self-Employment Verification Sources:
To be eligible for the 40% Self-Employment Expense Deduction, only one allowable expense needs to be verified. When self-employment expenses are not verified using the verification process, eligibility is determined without those deductions.
Examples of verification that can be used for self-employment income and expenses include, and are not limited to, any of the following:
●Bookkeeping records
●Business ledgers listing income amounts received and expenses incurred
●Actual receipts
●Contracts for work
●Statements from patrons and companies
●Most recent Internal Revenue Service (IRS) U.S. Individual Income Tax Return (1040) form. Below are common IRS Schedule forms that the participant may provide in addition to the 1040:
Schedule C, Profit or Loss From Business
Schedule E, Supplemental Income and Loss
Schedule F, Profit or Loss from Farming
Schedules B-1, C, D, K, K-1, K-2, K-3, and M-3 of IRS U.S. Return of Partnership Income (1065) form (See Limited Liability Company (LLC) Definition for more information about LLCs.)
NOTE The most recent IRS 1040 and Schedule forms an be used as verification of self-employment income and expenses when the participant indicates it accurately reflects the participant's current income.
●Rent or mortgage receipt for business property
●Property tax statements for business property
●Utility costs for business property
●Cleaning cost bills for business property
●Business location and equipment maintenance
●Personal records indicating personnel salaries or costs of outside labor, such as canceled checks and payroll checks
●Participant’s statement for self-employment income, when one of the following apply:
Other attempts to obtain verification have failed.
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
NOTE Participant statement verification may be used to verify self-employment expenses unless questionable(g).
Educational Income and Expenses Verification Sources:
Examples of verification that can be used for educational income and expenses include, and are not limited to, any of the following:
●Award letter
●Loan paper
●School
●Student expenses
●Bank loan funds
●Participant statement verification for transportation expenses
●Expense receipts
●School budget sheet or computer printout
Legal Authorities
AAC R6-12-501B3
AAC R6-12-503
7 CFR 273.1(b)(3)
7 CFR 273.21(f)(2)(v)
7 CFR 273.8(e)(2)(ii)
CFR 7 § 273.9(b)(1)(ii)
7 CFR 273.9(b)(2)
7 CFR 273.9(b)(2)(ii)
7 CFR 273.9(b)(2)(ii-vi)
7 CFR 273.9(b)(2)(v)
7 CFR 273.10(c)(3)(ii)
45 CFR 233.20(a)(3)(ii)
Internal Revenue Service Code of 1986
The Consolidated Appropriations Act of 2021
Public Law 113-295
U.S. Code 26 §609
last revised 02/26/2024