Tips and Gratuities
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This section includes information about income received as tips and gratuities.
Policy
Tips, also known as gratuities, received for services are countable as earned income.
Tips are counted as part of the gross wages using all of the following:
●The same earned income calculation as the wages
●The same pay period as the wages
●The same budgeting method as the wages
●The same conversion method as the wages
FAA uses the amount of tips shown on the paycheck stub unless the participant claims a different amount and the tips are verified. When tips are not shown accurately on the paycheck stub, the participant is encouraged to keep a daily tips record.
Countable income is used to determine an income budget. (See Income Budgeting to see how FAA determines the income budget.) FAA needs to know about income that is both countable and not countable to determine whether a budgetary unit’s expenses are exceeding their income. (See Income Eligibility for more information about how FAA uses countable and not countable income.)
Procedures
When the participant is present, have them sign the Authority to Release (FAA‑1765A) form to contact any companies or businesses involved. The FAA-1765A can be faxed or emailed to the participant's employer when it is not possible to use the Application for Benefits (FAA-0001A) or the HEAplus Authority to Release signed statement.
Discuss with the participant all of the following:
●Does the participant receive tips?
●When tips are received, discuss all of the following:
Is the amount received on the paycheck stub accurate and complete?
Does the paycheck stub only include tips received from credit cards?
Does the participant keep track of their tips separately?
NOTE When no tips record is available, inform the participant of the requirement to keep a daily tips record for future reviews. Document CADO of the discussion.
Tips are budgeted and keyed using all of the following guidelines:
●Together with the normal wages when the tips on the paycheck stub are accurate and complete. (Budget and key the gross amount on the stub which includes tips.)
●The difference is separate when the tips listed on the paycheck stub only identify a portion of the tips obtained. (Budget and key the gross amount on the stub which includes tips also budget and key the additional recorded tips separately.)
●All tips are separate when the tips are not listed on the paycheck stub. (Budget and key the gross amount of earnings on the paycheck stub for normal wages and also budget and key all recorded tips separately.)
NOTE Be sure to calculate the tip amounts for the same pay period and with the same budgeting and conversion method as the wages. When tips are keyed separately, use one hour for the number of hours worked.
See Income Budgeting for budgeting procedures.
Verification
System interface and the case file(g) must be reviewed before verification is requested. No additional verification is needed when AZTECS interface or HEAplus hubs have verified the information.
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.
Examples of verification that can be used for tips when it is considered 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.
●Daily tips record.
●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 one of the following occur:
Obtaining documented or collateral contact verification may cause harm or undue hardship(g) for the participant.
When all of the following occur:
●Other attempts to obtain the verification have failed. This includes documented and collateral contact verification.
●The participant has requested assistance from FAA.
●The worker has evaluated the request for assistance and cannot obtain the verification from another acceptable source.
●The participant statement is not questionable(g).
NOTE Many companies do not allow verification over the telephone. When an FAA-0053A or FAA-1701A must be completed by any of the following, see the company’s contact information to determine where FAA staff must send the form:
AZTECS Keying Procedures
Key the budgeted tips amount on EAIC using the WA Earned Income Type Code.
Use the amount of tips shown on the paycheck stub unless the participant claims a different amount and the tips are verified.
When tips are not listed on the paycheck stub, obtain the participant's written tips record. When no tips record is available, obtain the participant's statement and inform the participant of the requirement to keep a daily tips record.
Key the wages on EAIC using the WA Earned Income Code.
When self-employed, include the tips as part of the income budget amount. Key the budget amount on SEEI or SEEW using the appropriate Income Type Code. (See Income Types for the appropriate Income Type Code.)
Document the case file(g) thoroughly to support keyed codes, amounts, and frequencies. See the AZTECS Data Entry Guide for instructions on keying the AZTECS income screens.
NOTE Documentation must support determinations of eligibility and benefit level. Document in sufficient detail to ensure that any reviewer can assess whether the determination is reasonable and accurate. Include specific information regarding the reason the income is determined to be normal. (See Budgeting Income Documentation Requirements for additional information.)
Legal Authorities
AAC R6-12-501 (A-B)
A.R.S 46-292-P01
7 CFR 273.9(b)(1)(i)
last revised 10/02/2023