1. (1) General Information.

   1. (a) Gross annual income (annual income) is used to determine if the household falls within the Income Limits and to determine the Total Tenant Payment (TTP), the amount of the rent the program participant is responsible for paying. The income of every household member who resides in the assisted unit, including persons who are temporarily absent but included in the unit size calculation, will be included when calculating income. Temporarily absent household members are individuals absent from the assisted unit for less than ninety (90) consecutive days. See 0770-01-05-.26(2)(d) Absences from Unit.

   2. (b) Annual Income. Annual income is all amounts, not specifically excluded in 24 C.F.R. 5.609(b), received from all sources by each member of the household who is 18 years of age or older or is the head of household or spouse of the head of household, plus unearned income by or on behalf of each dependent who is under 18 years of age, and imputed returns on net household assets exceeding $50,000 (adjusted annually using the CPI-W) when the value of the actual returns from a given asset cannot be calculated. Imputed returns are based on the current passbook savings rate, as determined by HUD. See 24 C.F.R. 5.609(a).

      1. 1. Participants. Annual income is all amounts received or earned during the previous twelve-month (12) period.

   3. (c) Calculating Income (24 C.F.R. 5.609). The following procedures are observed when calculating income:

      1. 1. Applicants. Annual income is all amounts received or earned during the twelve- month (12) period following admission, since EIV income information is not available for applicants.

   4. (i) Previous Year’s Income. The previous year’s income may be utilized to determine the amount of income to be anticipated when current income cannot be clearly verified or determined, such as:

      1. (I) When a household member has a sporadic annual work history (factory production work, temporary services, teacher’s aides, etc.).
      2. (II) The household composition changes, and thus, household income is non-recurring (a particular member moves into and out of the household frequently).

      3. (III) For employment, unemployment, and social security income an Enterprise Verification System (EIV) report for the prior year may be used, supplemented with current documents where possible. Another preferred document for employment income is the previous year’s W-2 Wage and Tax statement or the Social Security Earnings Statement for the prior year when the participant has the same employment at the time of the certification or recertification.

         1. (IV) When bonuses are anticipated, but the employer does not know how much the bonus will be, the bonuses from last year are used.
         2. (V) When child support income is court-ordered, but the amount received fluctuates and does not consistently match the court order, the reports available from DHS’s child support online system are appropriate documentation to determine annual child support income.

   5. (ii) Annualized Income Conversion. All income is converted from periodic amounts to an annualized figure to complete rent calculations.

      1. (I) The two following methods may be used to do this and vary depending upon the circumstances of the household.

         1. I. Annualize current income and if the income changes after the initial move-in or recertification, conduct an interim if the income changes. II. Average known sources of varying income to compute an annual income calculation; no interim is processed.

            1. (II) In cases where a person works a nine-month schedule, to reduce administrative burden, the THDA will annualize the income over a 12-month period and not conduct an interim unless the person verifies they are separated from the employer permanently.

            2. (III) Periodic income is converted to annual income using the following calculations:

               1. I. Multiply weekly amount by 52. II. Multiply bi-weekly amounts by 26. III. Multiply monthly amounts by 12. IV. Multiply hourly amounts by the number of hours worked per week to get the weekly amount.

                  1. (iii) Irregular Income. Some circumstances present challenges to estimating anticipated income, including situations where a participant has non- recurring work or seasonal income or a participant who is self-employed. In all instances, the THDA will make a reasonable judgment as to the most reliable approach in estimating what the participant will receive during the year. In many of these challenging situations, mid-year or interim recertifications may be required to reflect changing circumstances.

                     1. 2. Participants. Annual income is all amounts received or earned during the previous twelve-month (12) period. THDA will use information available in the Enterprise Income Verification (EIV) System, when available.

                  2. (i) Comparison between EIV and Personal Declaration. The THDA will total the EIV income information, as well as any non-wage information, for the most recent 12 months of income that are available in EIV and will compare this total to the information provide on the Personal Declaration.

                     1. (I) Substantially the Same. If the information provided by the participant is substantially the same (less than $2400 annually or $200 per month) as what is contained in EIV, this is the participant’s annual income.
                     2. (II) Differs Substantially. If the source(s) or amount of income reported by the participant and contained in EIV differs substantially, the THDA must revert to using projected, anticipated income and conduct further verification, which may include at a minimum, four current, consecutive pay stubs. Other acceptable tenant-provided documentation (generated by a third-party source) include, but are not limited to: payroll summary report, employer notice/letter of hire/termination, SSA benefit verification letter, bank statements, child support payment stubs, welfare benefit letters and/or printouts, and unemployment monetary benefit notices.
                  3. (ii) Full Twelve Months Not Available in EIV. If there are not 12 consecutive months of income information available in EIV, then the THDA must revert to using projected anticipated income.
                  4. (iii) Change in Circumstances or Dispute. If there has been a change in circumstances for an applicant or participant household or the household disputes the EIV-reported income information and is unable to provide acceptable documentation to resolve the dispute, the THDA must request written third-party verification.
                  5. (iv) Sources Not Available in EIV. The THDA must continue to verify income from sources not available in EIV. However, the THDA must use the same time period for both wage and non-wage income.
                  6. (d) Minimum Income/Expenses Requirement. The THDA follows HUD Rental Integrity Monitoring (RIM) guidance when determining income. There is no minimum income requirement, but income reported must be reasonable in relationship to financial commitments reported by the household. The THDA will review the Personal Declaration to compare self-declared paid current expenses to reported income for reasonability. If the THDA finds that the household has claimed less income than non- delinquent expenses, the household will be required to report the additional income sources and amounts available to cover their currently paid expenses. If the household refuses to cooperate, the THDA may tally the amount of paid current monthly expenses and count this amount as monthly income, using the Personal Declaration as verification of the income.
                  7. (e) A household claiming zero income will have an interim contact every ninety (90) days until the household reports income.

                  8. (2) Income Considerations by Member Type (24 C.F.R. 5.609).

                     1. (a) Income of Adults. The annual income of the head, spouse or co-head, and other adult members of the family must be counted. In addition, persons under the age of eighteen

                  9. (18) who have entered into a lease under state law are treated as adults and their annual income must be counted. These persons will be either the head, spouse, or co- head; they are sometimes referred to as emancipated minors.

                     1. (b) Income of Dependents. A dependent is a family member who is under eighteen (18) years of age, is disabled, or is a full-time student. The head of the family, spouse, co- head, foster child, or live-in aide are never dependents. Some income received on behalf of family dependents is counted and some is not.

                        1. 1. Earned income of minors (family members under eighteen) is not counted.
                        2. 2. Benefits or other unearned income of minors is counted.
                        3. 3. When more than one family shares custody of a child, and both families live in assisted housing, only one family at a time can claim the dependent deduction. The family that counts the dependent deduction also counts the unearned income of the child. The other family claims neither the dependent deduction nor the unearned income of the child.

                     2. (c) Income of Full-Time Students. When full-time students aged eighteen (18) or older are dependents, THDA will count their earned income up to the maximum of the dependent allowance. If the income is less than the dependent allowance, the full amount of the income will be counted. If the income exceeds the dependent allowance, only the amount equal to the dependent allowance will be counted, and any excess will be excluded.

                        1. 1. A head, spouse or co-head can never be classified as a full-time student dependent. All income of a full-time student, eighteen years of age or older, is counted if that person is the head of the family, spouse, or co-head.
                     3. (d) Income Received for the Care of Foster Children & Adults. Payments received by the family through the official relationships with local welfare agencies, specifically provided for the care of the foster child or adult, is not counted.

                     4. (e) Income of Permanently Absent Household Members. Income of persons permanently absent will not be counted. The head of household must sign a certification that the member is permanently absent and the household will be required to verify that a member is permanently absent.

                        1. 1. Tax records, rental leases, utility bills, department of motor vehicle (DMV) records, criminal records, and other forms of computer-generated or third-party verification may be utilized to determine if a person is permanently or temporarily absent from the household.

                     5. (f) Income of Temporarily Absent Household Members. Income of temporarily absent household members who are included in the unit size calculation is counted. This includes all household members who are working out of town or are temporarily absent from the unit for any other reason (see below for military deployment). If the family wishes to remove an adult from the household, the policies above under permanent absence will be followed.

                        1. 1. The THDA will count the income of the spouse of the head of the household, even if the spouse is not currently considered a household member, when the following applies:
                     6. (i) The spouse is temporarily absent;
                     7. (ii) The head of household files a joint income tax return with the spouse, unless the head of household can specifically verify that he did not have access to the joint income; or
                     8. (iii) The spouse shares access to resources, such as checking or savings account with the head of household or another adult household member.
                     9. (iv) The gross income, including all pay and allowances, is counted as income, regardless of the amount actually sent to the household members remaining in the unit.

                     10. (g) Income of Deployed, Active Duty Military Personnel (24 C.F.R. 5.609(b)(8)). All regular pay, special pay, and allowances of a member of the Armed Forces, whether or not living in the unit, who is head of the family, spouse, or other person whose dependents are residing in the unit is counted.

                         1. 1. Hostile Fire Pay Exception. Special pay received by a person serving in the Armed Services who is exposed to hostile fire is an exception and is excluded from income under 24 C.F.R. 5.609(c)(7). Hostile fire pay is also called imminent danger pay and should be labeled as such on an armed forces member’s leave and earnings statement.

                     11. (h) Income of Confined Household Members (24 C.F.R. 982.54(d)(10)). An individual permanently confined to a nursing home or hospital may not be named as head, spouse or co-head, but may continue as a household member at the family’s discretion. If a household member is confined to a nursing home or hospital on a permanent basis, the household may elect one of the following choices:

                         1. 1. Include the income of the confined household member; accept any deductions for which the individual would qualify and maintain the same subsidy size; or
                         2. 2. Exclude the income; not qualify for any deductions for the individual; accept a reduced subsidy size (if applicable).
                     12. (i) Persons Receiving SSI Who Have a Designated Payee. For persons receiving Social Security Insurance (SSI) who are required to have a designated payee, their TTP calculation will be based on the net income available to the tenant. Net income is defined here as the tenant’s gross income minus the actual fee amount charged by the designated payee. This fee is typically ten (10) percent of the person’s SSI and is an administrative or processing fee. Expenses for the tenant that the payee pays out of the SSI amount is not excluded from net income and must be counted.

                  10. (3) Income Inclusions. Annual household income includes all amounts not specifically excluded in this Administrative Plan, received from all sources by each member of the family who is 18 years of age or older or is the head of household or spouse of the head of household, plus unearned income by or on behalf of each dependent who is under 18 years of age.

                      1. (a) When the value of net family assets exceeds $50,000 (which amount HUD will adjust annually in accordance with the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)) and the actual returns from a given asset cannot be calculated, imputed returns on the asset based on the current passbook savings rate, as determined by HUD.

                      2. (b) Earned Income. Earned income means income or earning wages, tips, salaries, other employee compensation, and net income from self-employment or operation of a business. Earned income does not include any pension or annuity, transfer of payments (meaning payments made or income received in which no goods or services are being paid for, such as welfare, social security, and governmental subsidies for certain benefits), or any cash or in-kind benefits.

                         1. 1. Self-Employment/Operation of a Business (24 C.F.R. 5.609 (b)(28)). Income from self-employment or operation of a business is counted using the calculation of net income equals gross income less expenses.

                      3. (i) If the applicant or participant filed taxes in the prior year, they must supply a copy of their tax return. The information in the tax return will be used to determine current business income. If the applicant or participant cannot provide the prior year’s tax return, they must supply other documents that verify gross income and expenses.

                         1. (I) Expenditures for business expansion or amortization of capital indebtedness may not be used as deductions in determining net income.
                         2. (II) An allowance for depreciation of assets used in a business or profession may be deducted, based on straight line depreciation, as provided in Internal Revenue Service regulations.
                         3. (III) Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
                         4. 2. Independent Contractor. An individual is considered an independent contractor instead of an employee in accordance with Internal Revenue Code Federal income tax requirements and whose earnings are consequently subjected to the Self-Employment Tax. In general, an individual is an independent contractor if the payer has the right to control or direct only result of the work and not what will be done and how it will be done.
                      4. (i) Income received as an independent contractor is included in annual income even if the source, date or amount of the income varies;
                      5. (ii) Considered self-employed.

                  11. (4) Income Exclusions.

                      1. (a) Earned Income Disallowance for Households with a Person with Disabilities (EID) (24 C.F.R. 5.617).

                         1. 1. The EID is a special income exclusion, extended to qualified households that include a person with disabilities who chooses to work or earn additional income, where the additional income is temporarily excluded from income so that it does not result in a rent increase. As of January 2, 2024, no new households qualify for the EID. The EID ends January 1, 2026.
                         2. 2. Qualified households consist of households that include a previously unemployed person with disabilities who has earned, in the twelve (12) months prior to employment, no more than would be received for ten (10) hours of work per week for fifty (50) weeks at the established minimum wage and whose:
                      2. (i) Annual income increases as a result of the employment of a person with disabilities who was previously unemployed for one or more years prior to their current employment; or
                      3. (ii) Annual income increases as a result of increased earnings by a person with disabilities who is participating in any economic self-sufficiency or other job training program; or

                      4. (iii) Annual income increases as a result of new employment or increased earnings of a person with disabilities during or within six months after receiving cash assistance, benefits or services under any state program for temporary assistance for needy families funded under Part A of Title IV of the Social Security Act, as determined by DHS.

                         1. (I) The TANF program is not limited to monthly income maintenance, but also includes such benefits and services as one-time payments, wage subsidies and transportation assistance—provided that the total amount over a six-month period is at least $500.
                         2. 3. The temporary disallowance is limited to two twelve-month (12-month) exclusion periods, one full and one partial, and a lifetime limit of forty-eight (48) months (four (4) years). The terms are not required to be consecutive, but must fall within the lifetime, 48-month period.
                         3. 4. The disallowance/exclusion of an increase in annual income is applied as follows:
                      5. (i) Initial Twelve-Month Exclusion. During the initial twelve-month period, beginning on the date a member of a household who is a person with disabilities of a qualified family is first employed, or the household first experiences an increase in annual income attributable to the employment, and the household reports the income, the THDA will exclude from annual income any increase in income of the family member who is a person with disabilities as a result of employment over prior income of that family member.
                      6. (ii) Second Twelve-Month Exclusion: During the second-twelve month period after the date a household member who is a person with disabilities of a qualified family is first employed, or the family first experiences an increase in annual income attributable to employment and the household reports the income, the THDA will exclude from annual income of a qualified family fifty percent (50%) of any increase in income of such household member as a result of employment over income of that family member prior to the beginning of such employment.

                      7. (iii) Maximum Four-Year Disallowance. The disallowance of increased income of an individual household member who is a person with disabilities as provided above is limited to a lifetime, 48-month period. Both the first twelve-month exclusion and the second only apply to a maximum of twelve months for each disallowance during the 48-month period starting from the initial exclusion.

                         1. 5. Inapplicability to Admission. The disallowance of increases in income as a result of employment of persons with disabilities under this section does not apply for purposes of admission to the program, including the determination of income eligibility or any income targeting that may be applicable.
                         2. 6. Failure to Timely Report Earned Income That Would Qualify for a Disallowance. If a household fails to timely report a change in employment income, but it is determined that the income could have been excluded due to the Earned Income Disallowance, no repayment will be required.
                         3. 7. If a household claims the earned income disallowance (disabled members only) for a source of income, both the source and the income must be verified.

                      8. (b) There are other certain types of income that are specifically excluded by regulation and are not counted towards the household’s Total Tenant Payment (TTP). Specific income exclusions include:

                         1. 1. Income from the employment of children (including foster children) under the age of eighteen (18) years and foster adults;
                         2. 2. Income of a live-in aide (as defined at 24 C.F.R. 5.403);
                         3. 3. Payments received for the care of foster children, foster adults through official foster care relationships with local welfare agencies or kinship payments;
                         4. 4. Earnings in excess of the dependent allowance for each full-time student 18 years of age or older other than the head, spouse, or co-head;
                         5. 5. The special pay to a family member serving in the armed forces who is exposed to hostile fire;
                         6. 6. Amounts received by a family that are specifically for, or in reimbursement of, the cost of health and medical care expenses for any family member are excluded from annual income;
                         7. 7. Non-recurring income of any kind, including employment income, that will not be repeated in the coming year (i.e. the twelve (12) months following the effective date of the certification) based on information provided by the family.

                      9. (i) Income that has a discrete end date and will not be repeated beyond the coming year during the family’s upcoming annual reexamination period will be excluded from a family’s annual income as nonrecurring income.

                         1. (I) Payments from the U.S. Census Bureau for employment (relating to decennial census or the American Community Survey) lasting no longer than 180 days and not culminating in permanent employment;
                         2. (II) Direct Federal or State payments intended for economic stimulus or recovery;

                         3. (III) Amounts directly received by the family as a result of State or Federal refundable tax credits or tax refunds at the time they are received;

                            1. (IV) Gifts for holidays, birthdays, or other significant life events or milestones (e.g., wedding gifts, baby showers, anniversaries);
                            2. (V) Non-monetary, in-kind donations, such as food, clothing, or toiletries, received from a food bank or similar organization; and
                            3. (VI) Lump-sum additions to net family assets, including but not limited to lottery or other contest winnings.
                         4. 8. Adoption assistance payments in excess of the dependent allowance per adopted child are excluded from annual income;
                         5. 9. Amounts received by participants in publicly assisted programs that are specifically for, or in reimbursement of, out-of-pocket expenses incurred (for special equipment, clothing, transportation, childcare, etc.) and that are made solely to allow participation in a specific program;
                         6. 10. Amounts paid by a state Medicaid managed care system, other state agency or authorized entity to a family to enable a family member who has a disability to reside in the family’s assisted unit; to a family to offset the cost of services and equipment needed to allow a developmentally disabled family member to live at home;
                         7. 11. Amounts received by a person with a disability that are disregarded for a limited time for purposes of SSI eligibility and benefits because they are set aside for use under a plan to attain self-sufficiency (PASS) are excluded from annual income;
                         8. 12. Earned income tax credit (EITC) refund payments received on or after January 1, 1991, including advanced earned income credit payments;
                         9. 13. Amounts received in the form of refunds or rebates under state or local law for property taxes paid on a dwelling unit are excluded from annual income (i.e. state homestead exemptions);
                         10. 14. Reparation payments made by a foreign government pursuant to claims filed under the law of that government by persons who were persecuted during the Nazi era;
                         11. 15. Amounts received under a resident service stipend not to exceed $200 per month. A resident service stipend is a modest amount received by a resident for performing a service for the PHA or owner, on a part-time basis, that enhances the quality of life in the development;
                         12. 16. Incremental earnings and benefits resulting to any family member from participation in training programs funded by HUD or in qualifying Federal, State, Tribal, or local employment training programs (including training programs not affiliated with a local government) and training of a family member as resident management staff;

                      10. (i) Excluded amounts must be received under employment training programs with clearly defined goals and objectives and are excluded only for the period during which the family member participates in the employment training program unless those amounts are excluded under part (b)7.(i) of this section.

                          1. 17. Any participants who are eligible for and have received the $250 stimulus payment as a part of the 2009 American Recovery and Reinvestment Act (ARRA);
                          2. 18. Deferred periodic amounts from supplemental security income (SSI) and social security (SS) benefits that are received in a lump sum amount (lump sum distributions are treated as an asset);
                          3. 19. Any imputed return on an asset when net family assets total $50,000 or less (which amount HUD will adjust annually in accordance with the CPI-W and no actual income from the net family assets can be determined;
                          4. 20. Income earned by government contributions to, or distributions from, “baby bond” accounts created, authorized, or funded by federal, state, or local government;
                          5. 21. Income and distributions from any Coverdell education savings account of or any qualified tuition program under IRS sections 529 and 530;
                          6. 22. The net amount disbursed by a lender to a borrower, under the loan terms. Funds may be received by the family or a third party (e.g. educational institution or car dealership);
                          7. 23. Payments received by tribal members as a result of claims relating to the mismanagement of assets held in trust by the United States. This includes payments from tribal trust settlements. Payments must be excluded from gross income under the IRS Code or other federal law;
                          8. 24. Replacement housing ”gap“ payments that offset increased rent and utility costs to families that are displaced from one federally subsidized housing unit and move into another federally subsidized housing unit;

                      11. (i) If the gap is reduced or eliminated because of subsequent move by the tenant or change in the subsidy, and the tenant continues to receive the payment, the payment that is no longer needed to close the gap should be counted as income.

                          1. 25. Civil rights settlements or judgments, including settlements or judgments for back pay;
                          2. 26. Income earned on amounts placed in a family’s Family Self Sufficiency (FSS) Account, including interim or final distributions from the account;
                          3. 27. Insurance payments and settlements for personal or property losses, including but not limited to payments through health insurance, motor vehicle insurance, and workers’ compensation;
                          4. 28. Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a member of the family becoming disabled;
                          5. 29. The special pay to a family member serving in the Armed Forces who is exposed to hostile fire;
                          6. 30. Payments related to aid and attendance for veterans under 38 U.S.C. § 1521;
                          7. 31. Income received from any account under an IRS-recognized retirement plan, including individual retirement arrangements (IRAs), employer retirement plans, and retirement plans for self-employed individuals; except that any distribution of periodic payments from such accounts shall be income at the time they are received by the family; and
                          8. 32. Deferred periodic amounts from Supplemental Security Income and Social Security benefits that are received in a lump sum amount or in prospective monthly amounts, or any deferred Department of Veterans Affairs disability benefits that are received in a lump sum amount or in prospective monthly amounts.

                  12. (5) Adjusted Income Allowances/Deductions (24 C.F.R. 5.611). Adjusted income is annual income minus allowances or mandatory deductions for dependents, elderly household allowance, childcare, medical and handicap expenses/deductions.

                      1. (a) Dependent Allowance (24 C.F.R. 5.611, 5.603(b)). The dependent allowance will be adjusted annually by HUD in accordance with the CPI-W, for each household member who is under eighteen (18) years of age, is age 18 or over and a person with a disability, or 18 or over and a full-time student. The only requirement is that the THDA verify that the family members identified as dependents or elderly/disabled persons meet the statutory definitions.

                         1. 1. The head, spouse, foster child or live-in attendant is never counted as a dependent.

                      2. (b) Elderly/Disabled Household Allowance (24 C.F.R. 5.611, 5.403(a)). The elderly/disabled household allowance is $525 which will be adjusted annually by HUD in accordance with the CPI-W, per household for all families in which the head or spouse is at least sixty-two (62) years of age or under age 62 and a person with a disability.

                         1. 1. The elderly/disabled allowance is a household deduction (only one per household, even if both head and spouse are elderly or have a disability).
                         2. 2. A household may have a member who is elderly or disabled, but if this person is not the head or spouse, the household does not qualify for the deduction.

                      3. (c) Health and Medical Care Expenses, Reasonable Attendant Care, and Auxiliary Apparatus Expenses. The sum of these, to the extent that the sum exceeds ten (10) percent of annual income, must be deducted from annual income.

                         1. 1. Unreimbursed Health and Medical Care Expenses Deduction (24 C.F.R. 5.609(b)(6), 5.603, 5.611). Health and medical care expenses are any costs incurred in the diagnosis, cure, mitigation, treatment, or prevention of disease or payments for treatment affecting any structure or function of the body. Health and medical care expenses include medical insurance premiums and long-term care premiums that are paid or anticipated during the period for which annual income is computed. The Unreimbursed Health and Medical Care Expenses Deduction is allowed only for households in which the head or spouse is at least sixty-two (62) years old or disabled.
                      4. (i) If the household is eligible for a Health and Medical Care Expenses Deduction, the medical expenses of all household members are counted.

                      5. (ii) Verification. The THDA must verify that the household is eligible for the deduction, the costs to be deducted are qualified health and medical care expenses, the expenses are not paid for or reimbursed by any other source, and costs incurred in past years are counted only once.

                         1. (I) Qualified Expenses. To be eligible for the Health and Medical Care Expenses Deduction, the costs must qualify as medical expenses. When it is unclear as to whether or not to allow an item as a health and medical care expense, the IRS Publication 502 is used as a guide. These may include:

                            1. I. Services of doctors and health care professionals. II. Services of health care facilities. III. Medical insurance premiums. IV. Prescription medication.

                               1. V. Non-prescription medicines that are prescribed by a doctor with a specific dosage. VI. Transportation to treatment. VII. Dental expenses, eyeglasses, hearing aids, batteries, etc. VIII. Live-in or periodic medical assistance. IX. Monthly payment on accumulated medical bills.

                                  1. X. Medical care of a permanently institutionalized household member if his/her income is included in annual income.

                                     1. (iii) Unreimbursed Expenses. To be eligible, the household must certify that the health and medical care expenses are not paid or reimbursed to the household from any source. The Personal Declaration serves as a self- certification.

                                     2. (iv) Expenses Incurred in Past Years. When anticipated costs are related to ongoing payment of medical bills incurred in past years, the THDA will verify:

                                        1. (I) The anticipated repayment schedule;
                                        2. (II) The amounts paid in the past; and
                                        3. (III) Whether the amounts to be repaid have been deducted from the household’s annual income in past years.

                                     3. (v) Amount of Expense. The amount of the expense will be verified using the following (dependent upon the type of expense and verification available):

                                        1. (I) Computer-generated documents or written verification by a doctor, hospital or clinic personnel, dentist, pharmacist, etc., of the estimated medical costs to be incurred by the applicant or participant, regular payments due on medical bills, and the extent to which those expenses will be reimbursed by insurance or a government agency;
                                        2. (II) EIV or SSA written confirmation (current benefit letter) of Medicare premiums to be paid by the applicant over the next twelve (12) months;

                                        3. (III) Computer-generated documents or written verification from the insurance company or employer for health insurance premiums to be paid by the applicant or participant;

                                           1. (IV) Receipts, canceled checks, or pay stubs that indicate health insurance premium costs, etc., that verify medical costs and insurance expenses also likely to be incurred in the next twelve (12) months;
                                           2. (V) Copies of payment agreements with medical facilities or canceled checks that verify payments made on outstanding medical bills that will continue over all or part of the next 12 months; and/or
                                           3. (VI) Receipts or other computer-generated record (pharmacy statement) of health and medical care expenses incurred during the past twelve

                                     4. (12) months that can be used to anticipate future health and medical care expenses. The THDA may use this approach for “general health and medical care expenses” such as non-prescription drugs and regular visits to doctors or dentists but not for one-time, non- recurring expenses from the previous year.

                                        1. (VII) If computer-generated documents or third-party verification is not possible, written certification from the medical provider as to costs anticipated to be incurred during the upcoming twelve (12) months will be used.
                                        2. 2. Disability Reasonable Attendant Care and Auxiliary Apparatus Expenses Deduction (24 C.F.R. 5.611(c)).

                                        3. (i) A household may deduct anticipated expenses for care attendants and “auxiliary apparatus” for members with a disability if such expenses:

                                           1. (I) Are associated with a household member with disabilities;
                                           2. (II) Are necessary to enable a household member, which may be the person with a disability, to work;

                                           3. (III) Sum of medical expenses, attendant care, and auxiliary apparatus expenses exceed three percent of Annual Income;

                                              1. (IV) Expenses are unreimbursed by any other source; and
                                              2. (V) Do not exceed the earned income of the household member(s) enabled to work.
                                        4. (ii) Eligible Disabled Household Member. The costs must be incurred for attendant care or auxiliary apparatus expense associated with a person with disabilities. The THDA must verify the existence of the disability.

                                        5. (iii) Is Required or Enables Household Member(s) to Work. The expenses claimed must actually be required or enable a household member or members, possibly the disabled household member(s), to work.

                                           1. (I) The THDA will seek third-party verification from a knowledgeable physician indicating that the person with disabilities requires attendant care or an auxiliary apparatus, or that the attendant care or auxiliary apparatus enables another household member or members to work.
                                           2. (II) If third-party verification has been attempted and is either unavailable or proves unsuccessful, the household must certify that the disability assistance expense is needed or frees a household member or members (possibly including the household member receiving the assistance) to work.
                                        6. (iv) Three Percent of Annual Income. There is a special calculation required for households who are eligible for both disabled and health and medical care expenses. Three (3) percent of the annual income must first be deducted from the handicap expense and any remainder is then deducted from the total health and medical care expense.

                                        7. (v) Unreimbursed Expenses. The costs of the attendant care or auxiliary apparatus must not be reimbursed by another source.

                                           1. (I) The THDA will seek third-party verification from an attendant-care provider that, to the best of the provider’s knowledge, the expenses are not paid by or reimbursed to the household from any source; and
                                           2. (II) The household will be required to certify that attendant care or auxiliary apparatus expenses are not paid by or reimbursed to the household from any source.

                                        8. (vi) Attendant Care. Expenses for attendant care will be verified through:

                                           1. (I) A doctor’s certification that the assistance of an attendant is medically necessary (form THDA HM-291);
                                           2. (II) The attendant’s written confirmation of hours of care provided and amount and frequency of payments received from the family or agency (or copies of canceled checks the family used to make those payments); and
                                           3. (III) The applicant’s or participant’s certification as to whether any of those payments have been or will be reimbursed by outside sources.

                                        9. (vii) Auxiliary Apparatus. Auxiliary apparatus includes items such as wheelchairs, ramps, adaptation to vehicles, special equipment to enable a blind person to read or type, etc., if the apparatus is directly related to permitting the person with the handicap or disability to work. Expenses will be verified through:

                                           1. (I) Computer-generated billing statements for purchase of auxiliary apparatus, or other evidence of monthly payments or total payments, that will be due for the apparatus during the upcoming twelve (12) months;
                                           2. (II) Third-party verification of anticipated purchase costs of auxiliary apparatus; or
                                           3. (III) If computer-generated documents or third-party verification is not possible, written certification by the household member of estimated apparatus costs for the upcoming twelve (12) months.
                                           4. 3. Hardship for Health and Medical Care and Disability Assistance Expenses (24 C.F.R. 5.611(c)). There are two categories of hardship exemptions.

                                        10. (i) Households currently receiving a deduction for expenses over three (3) percent of its income.

                                            1. (I) The household will receive a deduction totaling the sum of the expenses that exceed five (5) percent of annual income.
                                            2. (II) Twelve months after the relief in item (5)(c)3.(i)(I) is provided, the household must receive a deduction totaling the sum of expenses that exceed seven point five (7.5) percent of annual income.

                                            3. (III) Twenty-four months after the relief in item (5)(c)3.(i)(I) is provided, the household must receive a deduction totaling the sum of expenses that exceed ten (10) percent of annual income.

                                               1. (IV) A household may request hardship relief under (5)(c)3.(ii) prior to the end of the twenty-four (24) month transition period. If a household making such a request is determined eligible for hardship relief under (5)(c)3.(ii), hardship relief under (5)(c)3.(i) ends and the household’s hardship relief shall be administered in accordance with (5)(c)3.(ii).

                                        11. (ii) Households who can demonstrate a financial hardship. A household must demonstrate a financial hardship due to an increase in the household’s qualified expenses.

                                            1. (I) The household will receive a deduction for the sum of the eligible expenses that exceed five (5) percent of annual income.
                                            2. (II) The household’s hardship relief ends when the circumstances that made the family eligible for the relief are no longer applicable or after ninety (90) days, whichever comes earlier. THDA will grant an extension of the hardship up to an additional ninety (90) days, in thirty (30) day increments.

                                        12. (d) Childcare Allowance Expense Deduction (24 C.F.R. 5.603 and 611(a)(4)).

                                            1. 1. Reasonable child care expenses, necessary to enable a member of the household to be employed or to further the household member’s education, for the care of children, including foster children, under the age of thirteen (13), may be deducted from annual income if all of the following are true:
                                        13. (i) The costs claimed are not reimbursed by another source;
                                        14. (ii) The costs enable a household member to pursue an eligible activity;
                                        15. (iii) The costs are for an allowable type of childcare; and

                                        16. (iv) The costs are reasonable, as defined below.

                                            1. 2. Not Reimbursed by Another Source. Verification will be attempted through computer-generated documentation from the childcare provider. Any document must list the childcare provider’s name, address and phone number, child(ren)’s names who are cared for and the daily, weekly or monthly childcare expenses.
                                        17. (i) If the document provided to verify expenses does not clearly show that the household paid for the full expenses associated with the childcare, the family must certify on the Personal Declaration that the childcare expenses are not paid by or reimbursed to the household from any other source.

                                        18. (ii) If appropriate computer-generated documents are not provided, third-party written verification will be attempted through childcare provider identified by the household using the THDA’s Verification of Childcare Expenses form. The THDA form includes the childcare provider’s name, address, and phone number, and asks if any other sources reimburse any of the childcare, other than a household member.

                                            1. 3. Pursuing an Eligible Activity. The THDA must verify that the household member(s), which the household has identified as being enabled to seek work, pursue education, or be gainfully employed, are actually pursuing those activities. The THDA will verify information about how the schedule for the claimed activity relates to the hours of care provided, the time required for transportation, the time required for study for students, the relationship of the household member(s) to the child, and any special needs of the child that might help determine which household member is enabled to pursue an eligible activity.

                                        19. (i) Seeking Work. Whenever possible, the THDA will use documentation from a state or local agency that monitors work-related requirements (e.g., welfare or unemployment). In such cases, the THDA will request verification from the agency of the member’s job seeking efforts to date and require the household to submit to the THDA any reports provided to the other agency.

                                            1. (I) In the event third-party verification is not available, the THDA will provide the household with a form on which the household member must record job search efforts. The THDA will review this information at each subsequent reexamination for which this deduction is claimed.
                                        20. (ii) Furthering Education. The THDA will ask that the academic or vocational educational institution verify that the person permitted to further his education by the childcare is enrolled and provide information about the timing of classes for which the person is registered. A computer-generated document that shows the appropriate information about enrollment and dates and times of classes is acceptable. If acceptable computer- generated documents are not available, third-party verification from the school is required (form THDA HM-360).

                                        21. (iii) Gainful Employment. The THDA will seek verification from the employer of the work schedule of the person who is permitted to work by the childcare. In cases in where two or more household members could be permitted to work, the work schedules for all relevant household members may be verified.

                                            1. 4. Allowable Type of Childcare. The type of care to be provided is determined by the household but must fall within certain guidelines. The THDA will verify that the type of childcare selected by the household is allowable.
                                        22. (i) The THDA will verify that the fees paid to the childcare provider cover only childcare costs (e.g., no housekeeping services or personal services) and are paid only for the care of an eligible child (e.g., prorate costs if some of the care is provided for ineligible household members).
                                        23. (ii) The THDA will verify that the childcare provider is not an assisted household member. Verification will be made through the head of household’s declaration of household members who are expected to reside in the unit.

                                        24. (iii) If accurate and complete documentation is provided, the THDA will not make a determination of “adequate child care provided within the home” based on another adult being present within the unit while child care services are provided.

                                            1. 5. Reasonableness of Expenses.
                                        25. (i) Only reasonable childcare costs can be deducted. The actual costs the household incurs will be compared with equivalent types of care in the same locality to ensure that the costs are reasonable.
                                        26. (ii) If the household presents a justification for costs that exceed typical costs in the area, the THDA will request additional documentation, as required, to support a determination that the higher cost is appropriate.

                                        27. (iii) The expenses incurred to enable a household member to work must not exceed the amount earned.

                                            1. 6. Child support payments to guardians or estranged partners on behalf of a minor who is not living in the household are not deducted as child care payments.
                                            2. 7. Payments to a minor child who lives in the assisted household for caring for other minor children in the household are not deducted.
                                            3. 8. Hardship for Child Care Expenses. A household whose eligibility for the childcare expense deduction is ending may request a financial hardship exemption to continue the deduction.
                                        28. (i) A household must demonstrate a financial hardship due to being unable to pay their rent because of loss of this deduction, and the childcare expense is still necessary even though the family member is no longer employed or furthering education.
                                        29. (ii) The household’s hardship relief ends when the circumstances that made the family eligible for the relief are no longer applicable or after ninety (90) days, whichever comes earlier.

                                     5. (6) Assets (24 C.F.R. 5.603(b)). Net family assets is the net cash value of all assets owned by the household, after deducting reasonable costs that would be incurred in disposing real property, savings, stocks, bonds, and other forms of capital investment.

                                        1. (a) THDA must include the value of any business or family assets disposed of by an applicant or tenant for less than fair market value (including a disposition in trust, but not in a foreclosure or bankruptcy sale) during the two years preceding the date of application for the program or reexamination, as applicable, in excess of the consideration received;
                                        2. (b) In the case of a disposition as part of a separation or divorce settlement, the disposition will not be considered to be for less than fair market value if the applicant or tenant receives consideration not measurable in dollar terms;
                                        3. (c) Negative equity in real property or other investments does not prohibit the owner from selling the property or other investments, so negative equity alone would not justify excluding the property or other investments from family assets;

                                        4. (d) Income from Assets. The calculation to determine the amount of income from assets to include in annual income considers the following:

                                           1. 1. Ability to calculate. Use amount calculated from actual returns from an asset.
                                           2. 2. Inability to calculate. If it is not possible to calculate an actual return and:
                                        5. (i) The net family assets are $50,000 or less, the imputed income from that asset is excluded; and
                                        6. (ii) The net family assets are over $50,000, THDA will impute income for the asset based on the current passbook savings rate, as determined by HUD.

                                     6. (7) Asset Inclusion/Exclusions.

                                        1. (a) Asset Inclusions. Household assets include all assets not specifically excluded in this Administrative Plan.

                                        2. (b) Asset Exclusions. The following household assets are not included:

                                           1. 1. The value of necessary items of personal property;
                                           2. 2. The combined value of all non-necessary items of personal property if the combined total value does not exceed $50,000 (which amount will be adjusted by HUD in accordance with the CPI-W);
                                           3. 3. The value of any account under a retirement plan recognized by the Internal Revenue Service;
                                           4. 4. The value of real property that the family does not have the effective legal authority to sell;
                                           5. 5. Any amounts recovered in any civil action or settlement based on a claim of malpractice, negligence, or other breach of duty owed to a family member arising out of law, that resulted in a family member being a person with a disability;
                                           6. 6. The value of any Coverdell education savings account under section 530 of the Internal Revenue Code of 1986, the value of any qualified tuition program under section 529 of such Code, the value of any Achieving a Better Life Experience (ABLE) account authorized under Section 529A of such Code, and the value of any “baby bond” account created, authorized, or funded by Federal, State, or local government;
                                           7. 7. Interests in Indian trust land;
                                           8. 8. Equity in a manufactured home where the family receives assistance under 24 C.F.R. 982;
                                           9. 9. Equity in property under the Homeownership Option for which a family receives assistance under 24 C.F.R. 982;
                                           10. 10. Family Self-Sufficiency Accounts;
                                           11. 11. Federal tax refunds or refundable tax credits for a period of 12 months after receipt by the family; and
                                           12. 12. Trust Fund that is not revocable or under the control of any member of the household.

                                     7. (8) Calculating Income from Assets-Specific Types.

                                        1. (a) Annuities.

                                           1. 1. Income after the holder begins receiving payments.
                                        2. (i) When verifying an annuity, the THDA will ask the verification source whether the holder of the annuity has the right to withdraw the balance of the annuity. For annuities without this right, the annuity is not treated as an asset.

                                        3. (ii) In cases where annuity payments have commenced, usually the holder cannot receive payment as a lump sum, therefore proof a holder is receiving payments will be sufficient to establish that the annuity is not an asset unless the THDA receives information to the contrary.

                                           1. 2. Calculations when an annuity is considered an asset.
                                        4. (i) When an applicant or participant has the option of withdrawing the balance in an annuity, the annuity will be treated like any other asset. It will be necessary to determine the cash value of the annuity in addition to determining the actual income earned.
                                        5. (ii) In most instances, an annuity from which payments have not yet been made is earning income on the balance in the annuity. A fixed annuity will earn income at a specified fixed rate similar to interest earned by a CD. A variable annuity will earn or lose, based on market fluctuations, as in a mutual fund.

                                        6. (iii) The THDA will verify with the insurance agent or other appropriate source:

                                           1. (I) The right of the holder to withdraw the balance (even if penalties are involved).
                                           2. (II) The basis on which the annuity may be expected to grow during the coming year.

                                           3. (III) The surrender or early withdrawal penalty fee.

                                              1. (IV) The tax rate and the tax penalty that would apply if the family withdrew the annuity.
                                        7. (iv) The cash value will be the full value of the annuity, less the surrender, or withdrawal, penalty, and less any taxes and tax penalties that would be due.
                                        8. (v) The actual income is the balance in the annuity times the percentage (either fixed or variable) at which the annuity is expected to grow over the coming year. (This money will be reinvested into the annuity, but it is still considered actual income.)
                                        9. (vi) The imputed income from the asset is calculated only after the cash value of all family assets has been determined. The imputed income of assets is calculated on the total cash valuate of all assets.

                                        10. (b) Trust Distributions.

                                            1. 1. Revocable trust considered part of net household assets. Revocable trust is a trust that the creator of the trust may amend or end (revoke) and if any member of the household has the right to withdraw the funds in the account. If the value of the trust is considered part of the household’s net assets, then distributions from the trust are not considered income to the household.
                                            2. 2. Revocable or irrevocable trust not considered part of the net household assets. Irrevocable trust is a trust where the creator has no access to the funds in the account. If the value of the trust is not considered part of the household’s net assets, then distributions from the trust are treated as follows:
                                        11. (i) Distributions of the principal, or corpus, of the trust, and
                                        12. (ii) Distributions of income from the trust used to pay the costs of health and medical care expenses for a minor.
                                        13. (iii) Except that any actual income earned by the trust, regardless of whether it is distributed, shall be considered income to the family at the time it is received by the trust.

                                        14. (c) Assets Owned Jointly.

                                            1. 1. If assets are owned by more than one person, prorate the assets according to the percentage of ownership, but if no percentage is specified or provided by a state or local law, prorate the assets evenly among all owners.
                                            2. 2. If an asset is not effectively owned by an individual, do not count it as an asset.

                                        15. (i) An asset is not effectively owned when the asset is held in an individual’s name, but:

                                            1. (I) The asset and any income it earns accrue to the benefit of someone else who is not a member of the family; and
                                            2. (II) That other person is responsible for income taxes incurred on income generated by the assets.

                                        16. (d) Assets Disposed of for Less than Fair Market Value. At every certification and recertification, applicants and participants must declare, on the Personal Declaration, every asset that has been disposed of for less than fair market value during the two years preceding the certification or recertification. If the household disposes of more than $1,000 in assets during a twelve-month period, the amount must be imputed and counted as income.

                                            1. 1. The amount counted as an asset is the difference between the cash value and the amount actually received. If the household declares that they have, the circumstances surrounding the transaction is verified.

                                        17. (i) Any asset that is disposed of for less than its full value is counted, including cash gifts as well as property. To determine the amount that has been given away, the cash value of the asset is compared to any amount received in compensation.

                                            1. (I) Imputed income is the difference between the actual amounts received and the fair market value, minus any costs incurred when selling the asset. Imputed income is included in household income for two years from the date when the asset was disposed.
                                        18. (ii) Assets placed in non-revocable trusts are considered as assets disposed of for less than fair market value except when the assets placed in trust were received through settlements or judgments.
                                        19. (iii) Generally, assets disposed of as a result of divorce or separation are not considered as assets disposed of for less than fair market value.
                                        20. (iv) Assets disposed of as a result of foreclosure or bankruptcy are not considered as assets disposed of for less than fair market value.

                                     8. (9) Restrictions Based on Assets.

                                        1. (a) The household’s net assets may not exceed $100,000, which amount will be adjusted annually by HUD in accordance with the CPI-W.

                                        2. (b) The household may not have ownership interest in, a legal right to reside in, and the effective legal authority to sell real property that is by the household as a residence, except this real property restriction does not apply to:

                                           1. 1. Any property for which the household is receiving assistance under THDA’s Home Ownership program;
                                           2. 2. Property jointly owned by a member of the household and at least one non- household member who does not live with the family, if the non-household member resides at the jointly owned property;
                                           3. 3. Any person who is a victim of domestic violence, dating violence, sexual assault, or stalking; or

                                        3. (i) Verification must include the HUD’s VAWA Self-Certification Form (Form HUD-5382).

                                           1. 4. Any household that is offering such property for sale.
                                        4. (i) Verification of Seller. Provide a contract between the listing agent and seller and/or the real estate listing.

                                        5. (c) A property will be considered suitable for occupancy unless the household demonstrates that it:

                                           1. 1. Does not meet the disability-related needs for all members of the household;
                                           2. 2. Is not sufficient for the size of the household according to THDA’s subsidy standards;
                                           3. 3. Is located so as to be a hardship for the household;
                                           4. 4. Is unsafe because of physical condition according THDA’s HQS or occupancy standards; or
                                           5. 5. Is not a property that a household may reside in under the State or local laws of the jurisdiction where the property is located.

                                     9. (10) Verification. Any assets and income reported by the household must be verified.

                                        1. (a) Verifying Income. When a household claims income of any amount from any type or source, unless the income may be excluded, an attempt to verify the income either through up-front income verification (UIV) sources, appropriate computer-generated documents from a third-party source, or by third-party written verification methods must be attempted. If UIV, appropriate computer-generated documents, or third-party written verification is unsuccessful, all attempts to verify the income must be tracked on the Verification Tracking Log, and the THDA will use third-party oral or tenant self- certification as verification.

                                           1. 1. Earned Income.

                                        2. (i) Wages. The following are acceptable documents for verifying wages in order of hierarchy level:

                                           1. (I) HUD EIV report with current, supplemental documents, preferably computer-generated.

                                              1. I. The most recent four (4) consecutive, current pay stubs showing employee’s gross pay per pay period and frequency of pay. II. If the employee has been employed for less than four (4) pay periods, they may provide all of the pay stubs they have received up to the date of the reexamination appointment in consecutive order and the THDA will send the THDA Employer Verification Form to the employer for completion. III. Computer-generated payroll report.

                                                 1. (II) Work Number report.

                                                 2. (III) The THDA Employment Verification form completed and signed by the employer.

                                                    1. (IV) Social Security Earnings Statement (form 7004) from most recent prior year, if other sources of current wage income are not available.
                                                    2. (V) Copy of the most recent prior year’s tax return if other sources of current wage income are not available.
                                                 3. (ii) Tips. Unless tip income is included in a household member’s W-2 by the employer and the household supplies a copy of the most recent tax return, tips should be included in the amounts declared for self-employment income. Persons who work in industries where tips are standard will be required to include an estimate of tips received for the prior year and tips anticipated to be received in the coming year on their Personal Declaration. The information in the Personal Declaration will document the amount of tips.

                                                 4. (iii) Business and Self-Employment Income.

                                                    1. (I) Business owners and self-employed persons are required to provide all of the following when available:

                                                       1. I. An audited financial statement for the previous fiscal year if an audit was conducted. II. If an audit was not conducted, a statement of income and expenses must be submitted and the business owner or self- employed person must certify to its accuracy. III. All schedules completed for filing federal and local taxes in the preceding year. IV. If accelerated depreciation was used on the tax return or financial statement, an accountant’s calculation of depreciation expense, computed using straight-line depreciation rules.

                                                          1. V. If the aforementioned documents are not available:

                                                             1. A. Documents such as manifests, appointment books, cash books, bank statements and receipts from the prior six

                                                                1. (6) months (or lesser period if not in business for six months) will be used as a guide to project income for the next twelve (12) months. VI. If a household member has been self-employed for less than three (3) months, the THDA will accept the household member’s certified estimate of income and schedule an interim reexamination in three (3) months.

                                                                   1. A. If the self-employment has been from three (3) months to twelve (12) months, the household must provide documentation of income and expenses for such period and the THDA will use the information provided to project income. VII. At any reexamination, the THDA may request documents that support submitted financial statements such as manifests, appointment books, cash books or bank statements.

                                                                      1. (II) Any tips should be included in the amounts declared for self- employment income.

                                                                      2. (iv) Child Care Business. If an applicant/participant is operating a licensed daycare business, income will be verified as with any other business. Follow above guidance under Business/Self Employment Income.

                                                                         1. (I) However, if the day care is operating as a “cash and carry” operation, which may or may not be licensed, verification of income received may be more difficult.

                                                                            1. I. The applicant/participant must complete the THDA Verification of Child Care Business form that shows the name of the child’s guardian, phone number, number of hours child is being cared for, method of payment (check, cash, credit, etc.) and the signature of the client certifying to amounts paid for child care. II. If the household owning the business has filed a tax return, they will be required to provide it.

                                                                               1. 2. Unemployment Compensation. The following are acceptable documents for unemployment compensation verification in order of hierarchy level.
                                                                               2. (i) Computer-generated letter or report from the unemployment office to confirm benefit status and payments. The Tennessee Department of Labor provides web-based unemployment reports for beneficiaries.
                                                                               3. (ii) The four (4) most recent unemployment payments. If unemployment period is less than four pay periods, all of the payments received up to the date of the reexamination appointment, in consecutive order, may be provided.
                                                                               4. (iii) ACCENT computer report showing the amount of benefits the household is currently receiving.

                                                                               5. (iv) If an EIV report includes employment at an employer where the participant claims to be no longer employed, the participant must provide a computer- generated document to verify the separation date of the employment, unless the unemployment documents clearly document the separation date from the employer on the EIV report.

                                                                                  1. (I) If a computer-generated letter is not provided, the THDA must initiate third-party methods to verify the separation before excluding the employment from annual income or not counting the income as a discrepancy for repayment.
                                                                                  2. 3. Social Security/SSI Benefits (Periodic Payments and Payments in Lieu of Earnings).

                                                                               6. (i) For applicants:

                                                                                  1. (I) Current Social Security Administration (SSA) benefit verification letter for each household member receiving SS/SSI benefits, dated within sixty (60) days of the request date, since Enterprise Income Verification (EIV) reports are not available for applicants at initial move-in.

                                                                               7. (ii) For participants:

                                                                                  1. (I) HUD EIV report. Social security information in EIV is updated every three (3) months for participants.

                                                                                     1. I. Therefore, supplemental information is not necessary unless the participant disputes the EIV report, in which case, a current SSA benefit letter, dated within sixty (60) days of a request by the THDA, must be provided to the THDA to supplement the EIV report information.

                                                                                        1. (iii) If an applicant or participant is unable to provide a current benefit letter dated within the deadline, the household must request a benefit verification letter and submit it to the THDA within fourteen (14) days of receipt.

                                                                                           1. 4. Alimony or Child Support. Verification method is dependent upon whether there is a court decree or not.

                                                                                        2. (i) If payments are court-ordered and paid through a state or local agency:

                                                                                           1. (I) Appropriate verification is a record of payments for the past twelve

                                                                                        3. (12) months and any known information about the likelihood of future payments from the web-based Tennessee DHS Child Support Summary (TCSES) or other online child support system.

                                                                                           1. I. The household is required to submit their member identification number for any online system.

                                                                                              1. (ii) If payments are court-ordered, but not paid through a state or local agency:

                                                                                                 1. (I) Copy of a separation agreement, settlement agreement, court decree, etc. stating amounts and types of support and payment schedules and/or copy of the latest check or payment stubs.

                                                                                              2. (iii) If payments are not court-ordered, but the participant declares they receive support:

                                                                                                 1. (I) Third-party written verification from the person paying the support, i.e. the THDA Child Support Verification form for child support payments.

                                                                                                    1. I. If the written verification is not returned, a self-certification of amount received and of the likelihood of support payments being received in the future.

                                                                                                       1. 5. Recurring Contributions/Gifts. Applicants and participants are required to disclose all forms of income including recurring gifts from household members, friends and others. The THDA must verify this income and include it when determining the Total Tenant Payment and Housing Assistance Payment.
                                                                                                       2. (i) The person(s) providing the support will be mailed the THDA Verification of Family Support form stating the amount of support paid each month.

                                                                                                       3. (ii) The THDA will compare the amount the household declared they were receiving on the Personal Declaration to the amount shown on the Verification of Family Support and use the higher of the amounts provided.

                                                                                                          1. (I) If gift amounts vary, an average taken over six (6) months may be used for calculations.
                                                                                                       4. (iii) If the household cannot or will not provide the contact information for the person(s) providing recurring support or the third-party verification is not returned, the Personal Declaration or another statement may be used as a self-certification.

                                                                                                       5. (iv) When a household reports that they are no longer receiving the gifts, the household must complete a new Personal Declaration as part of the recertification process and the person(s) who had been providing the gifts will be mailed a new Verification of Family Support form to verify the gifts to the household have ceased.

                                                                                                          1. 6. Student Income (Part-Time and Full-Time Student(s)). See 0770-01-05-.19(4)(c) and 0770-01-05-.15 for Student Status Eligibility discussion.
                                                                                                          2. 7. Interest Income from Sale of Real Property. Any interest income from the sale of real property pursuant to a purchase money mortgage, installment sales contract, or similar arrangement must be included as household income and verified by the THDA.
                                                                                                       6. (i) The applicant/participant must provide a letter or printed statement from an accountant, attorney, real estate broker, the buyer, or a financial institution stating interest due for next twelve (12) months.
                                                                                                       7. (ii) The applicant/participant may provide an amortization schedule showing interest for the twelve (12) months following the effective date of the certification or recertification in lieu of a letter.
                                                                                                       8. (iii) A copy of the check paid by the buyer is not sufficient since appropriate breakdown of interest and principal are not included.

                                                                                                       9. (b) Assets and Income from Assets. The applicant or participant must provide original computer-generated documents, such as bank statements or quarterly investment reports, for each asset account.

                                                                                                          1. 1. The applicant or participant must provide appropriate original computer- generated documents for each asset account.
                                                                                                          2. 2. Checking and Savings Accounts.
                                                                                                       10. (i) For checking accounts, the most recent bank statement is required for review and copy.

                                                                                                       11. (ii) For savings accounts, the most recent bank statement is required for review and copy.

                                                                                                           1. 3. Stocks, Bonds, 401K and other Investment Accounts.
                                                                                                       12. (i) The applicant or participant must provide the most recent, computer- generated statement showing the balance of the account or fund and any interest earned during the period.

                                                                                                       13. (ii) The document should be dated within sixty (60) days of the request, unless the investment manager provides quarterly or less frequent statements. The document should not be dated earlier than six (6) months from the effective date of the examination, unless proof is provided that statements are only available annually.

                                                                                                           1. 4. Retirement or Pension Accounts.

                                                                                                       14. (i) Before Retirement. The applicant or participant must provide an original, computer-generated document from the entity holding the account.

                                                                                                           1. (I) The document should be dated within sixty (60) days of the request, unless the investment manager provides quarterly or less frequent statements. The document should not be dated earlier than six (6) months from the effective date of the examination, unless proof is provided that statements are only available annually.

                                                                                                       15. (ii) Upon Retirement. The applicant or participant must provide an original, computer-generated statement from the entity holding the account that reflects any distributions of the account balance, any lump sums taken, and any regular payments.

                                                                                                           1. (I) The document should be dated within sixty (60) days of the request, unless the investment manager provides quarterly or less frequent statements. The document should not be dated earlier than six (6) months from the effective date of the examination, unless proof is provided that statements are only available annually.

                                                                                                       16. (iii) After Retirement. The applicant or participant must provide an original, computer-generated document from the entity holding the account that reflects any distributions of the account balance, any lump sums taken, and any regular payments.

                                                                                                           1. (I) The document should not be dated earlier than twelve (12) months from the effective date of examination.
                                                                                                           2. 5. Real Estate Investments.

                                                                                                       17. (i) Current Market Value of the Property.

                                                                                                           1. (I) If the THDA can locate information online regarding the current market value of the property, then the information will be considered up-front income verification.
                                                                                                           2. (II) If online information cannot be located for property located within or outside the state of Tennessee, a computer-generated statement or letter showing the current market value of the property from the applicable property assessor’s office is acceptable.

                                                                                                       18. (ii) Unpaid Balance of any Loans. The balance may be verified by a current statement, dated within sixty (60) days of the request, from the financial or lending institution that holds the loan(s).

                                                                                                           1. 6. Net Income from Rental Property. The household must provide:
                                                                                                       19. (i) A current, executed lease for the property that shows the rental amount or certification from the current tenant; and

                                                                                                       20. (ii) A self-certification from the household members engaged in the rental of property providing an estimate of expenses for the coming year and the most recent IRS Form 1040 with Schedule E (Rental Income).

                                                                                                           1. (I) If a Schedule E was not prepared, the household members involved in the rental of property must provide a self-certification of income and expenses for the previous year and the THDA will request documentation to support the statement (including tax statements, insurance invoices, bills for reasonable maintenance and utilities, and bank statements or amortization schedules showing monthly interest expense), if needed.
                                                                                                           2. 7. Cash Value of Trusts (including revocable trusts). The balance may be verified by a current statement, dated within sixty (60) days of the request, showing the balance of the trust and any interest earned during the period.
                                                                                                           3. 8. Assets Disposed of for Less than Fair Market Value. The household must certify whether any assets have been disposed of for less than fair market value in the preceding two years.

                                                                                                       21. (i) The THDA will only verify the value of assets disposed of if:

                                                                                                           1. (I) The THDA does not already have a reasonable estimation of value from previously collected information; or
                                                                                                           2. (II) The amount reported by the household in the certification appears to obviously be an error.

                                                                                                           3. (III) Verification will be based on the methods described above under Real Estate Investments.

                                                                                                              1. (IV) A self-certification will be accepted from a household as verification if computer-generated documents are not available.
                                                                                                           4. 9. Life Insurance Policies. A computer-generated statement showing the name of the insurance company, policy number, type of insurance (whole or term), and cash balance if the insurance is whole life is acceptable unless the family can provide an updated statement dated within (sixty) 60 days of the request. If the life insurance company provides quarterly or less frequent statements, the most recent statement is acceptable. The document should not be dated earlier than six (6) months from the effective date of the examination unless the tenant provides proof that statements are only available annually.
                                                                                                           5. 10. Lump-Sum Receipts.
                                                                                                       22. (i) Included. Lump-sum amounts that represent the delayed start of a periodic payment for anything other than SSI, SS, and VA disability benefits are included in annual income.

                                                                                                       23. (ii) Excluded. Any lump-sum receipts that do not represent the delayed start of a periodic payment, including lottery winnings, that are received in a single lump sum, are excluded from annual income. However, such lump-sum receipts may or may not be counted as assets, depending on when they are received and whether or not they are retained.

                                                                                                           1. (I) Lump-sum amounts representing a delayed start of period payments for SSI, SS, and VA.
                                                                                                           2. (II) HUD regulations describe excluded amounts as “lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker’s compensation), capital gains and settlement for personal or property losses.” The list of examples here is not intended to be complete.

                                                                                                       24. (c) Special Considerations/Exclusions.

                                                                                                           1. 1. Income Received from Training Programs. Special rules also apply to HCV participants who receive welfare assistance from a government program that requires a family member to participate in an economic self-sufficiency program. Economic self-sufficiency program is defined broadly as any program designed to encourage, assist, train, or facilitate the economic independence of HUD- assisted families. Programs that satisfy this definition include:
                                                                                                       25. (i) Job training, employment counseling, workfare, work placement, and apprenticeship programs. This also includes incremental amounts from qualifying state of local employment training programs.

                                                                                                       26. (ii) In the Tennessee TANF programs, it is rare that persons participating in DHS job training programs receive income associated with a qualifying job training program under the HUD definition. Therefore, the THDA will seek information from the family regarding their participation in job training programs, and on a case by case basis determine the treatment of income for families who receive welfare assistance and participate in a job training program.

                                                                                                           1. 2. Zero Annual Income Status. Families declaring zero household income must complete a THDA Zero Income Statement form for each adult household member reporting no income and will have an interim contact every ninety (90) days until the household reports some type of income. There is no minimum income requirement, but income reported must be reasonable in relationship to financial commitments reported by the household. For example, if the household reports no income, it is not reasonable that all bills/debts are paid in a timely manner.

                                                                                                       27. (i) If a family reports an interim change in income at a time other than annual, all adult household members with no income will be required to complete zero income documentation, even if they have already done so at the recertification.

                                                                                                           1. 3. Income from Excluded Sources. The THDA must obtain verification for income exclusions only if, without verification, the THDA would not be able to determine whether the income is to be excluded. For example, if a 16-year-old household member has a job at a fast food restaurant, the THDA will confirm its records verify the child’s age, but will not send a verification request to the restaurant.
                                                                                                           2. 4. The THDA will reconcile differences in amounts reported by the household and UIV, computer-generated documents or third-party verifications only when the excluded amount is used to calculate the family share (as is the case with the earned income disallowance). In all other cases, the THDA will report the amount to be excluded as indicated on documents provided by the household or any self- certification.

Authority: T.C.A. §§ 13-23-102, 13-23-104, and 13-23-115(18), 42 U.S.C. § 1437, and 24 C.F.R., Parts 5 and 982. Administrative History: Original rule filed May 16, 1980; effective June 30, 1980. Repeal filed September 28, 2004; effective December 12, 2004. Repeal and new rule filed June 4, 2015; effective September 2, 2015. Amendments filed June 11, 2024; effective September 9, 2024. Emergency rules filed January 13, 2026; effective through July 12, 2026.