650.2 Countable Earned Income

The CAO must count payments received in exchange for services rendered as earned income. Earned income includes the following, before taxes or other deductions:

55 Pa. Code § 601.82(1); LIHEAP State Plan § 601.82(1)

(1) Wages, including tips.

(2) Salaries.

NOTE: Money added after taxes to net pay that is reimbursement for expenses is not counted.

(3) Commissions and bonuses.

(4) Profit from self-employment.

Self-employment includes, but is not limited to, operating one's own business, trade or profession. Some examples of self-employment are providing day care, mowing lawns, shoveling snow, selling Avon, selling eggs and renting a room in one's home.

55 Pa. Code § 601.82(2); LIHEAP State Plan § 601.82(2)

(5) Rental property income if the applicant manages the property.

(6) AmeriCorps stipends.

NOTE: If the applicant is an AmeriCorps*VISTA volunteer, the income is excluded.

(7) Sick benefits provided by an employer through the regular payroll process or through contract with an insurance carrier.

650.21 Profit from Self-Employment

When deciding who qualifies for benefits, the CAO must count profit rather than gross income from self-employment. The profit of a self-employed person is the total amount of money the person brings in minus the allowable costs of earning the income.

55 Pa. Code § 601.82(2); LIHEAP State Plan § 601.82(2)

Allowable costs of earning income include the following:

• Costs of maintaining a place of business such as rent, utilities, insurance on the business and its property, and property taxes.

NOTE: If a business is operated in a home, the costs of maintaining a place of business are only those costs identified for the part of the home used solely for the business.

• Interest on the purchase of income-producing equipment and property.

• Employee labor costs.

• Cost of goods sold, supplies and materials.

• Advertising costs.

• Accounting and legal fees.

• Professional licensing fees and union dues, if necessary to practice a profession or trade.

• Transportation costs necessary to produce income.

The following costs of doing business must not be subtracted from gross income:

55 Pa. Code § 601.82(2(i)); LIHEAP State Plan § 601.82(2)(i)

• Depreciation.

• Personal business and entertainment expenses.

• Personal transportation.

• Purchase or improvement of capital assets or equipment used to make or sell a product or service.

• Payment on the original amount of money borrowed to buy capital assets or durable goods.

• Payments on the principal of loans for income-producing property or equipment.

• Work-related expenses such as federal, state and local income taxes, contributions to retirement funds, and transportation to and from work.

NOTE: These are expenses that the work expense deduction is intended to cover. See Cash Assistance Handbook Chapter 160, Income Deductions.

• Deposits into the self-employed person’s retirement account and payment for his or her life insurance.

NOTE: Loss of income from one source may not be subtracted from another source of income.

650.211 Proving Self-Employment Income

An applicant may use his or her tax return from the previous year if the current year’s return has not been filed with the IRS. The applicant must be able to prove there has been no significant change in income or expenses from the previous year.

If the applicant's self-employment is so new that he or she has not yet filed IRS tax returns for that income, the CAO may accept other proof, such as deposit and withdrawal slips from a bank account or bank statements, that show how much money the applicant has to live on each month and how bills are paid.

Annual profit is compared to the LIHEAP annual income limits to determine if a household qualifies. Annual profit, minus the 20 percent disregard, is entered into e-CIS to determine the benefit amount.

650.212 Income from Roomers, Boarders or Persons Renting an Apartment in the Applicant’s Resident Property

Income from providing room or board, or both, includes all payments paid directly to the LIHEAP household member for providing room rent, meals and utilities in the household member’s permanent home. Even if it is coming from someone else within the LIHEAP household. Shelter expenses, such as utilities, paid directly to a third party are not counted as household income. Income is computed as follows:

55 Pa. Code § 601.82(3) and 183.65(2); LIHEAP State Plan § 601.82(3)

If the LIHEAP applicant is only renting out a room or an apartment, the CAO or crisis contractor must do the following:

1. Total the amount of rent being paid by all roomers.

2. Subtract 50 percent.

The resulting amount is considered profit from room or apartment rent.

Examples:

• Mrs. Abey rents a room in her home and receives $60 a month room rent.

• Mr. and Mrs. Hicks rent rooms to Amy Smith, Kristi Sperry and Marlene Finkenbinder. Each room rents for $70 a month.

• Example: John Doe receives $1000/month in RSDI and rents a room from Jim Smith for $200 per month. Jim Smith receives $800 per month in RSDI. The total $1800 in RSDI payments received by both John and Jim would be counted. Per LIHEAP policy, 50% of the roomer income received by Jim Smith counts as earned income as well. In this situation, the total household monthly income counted for LIHEAP would be $1900.

If the LIHEAP applicant provides only board, the CAO or crisis contractor must do the following:

1. Total the amount of board being paid.

2. Subtract the maximum SNAP benefit for the household size based on the total number of boarders.

3. Click here to view the Basis of Issuance tables, effective October 1, 2015, for households with 1 to 10 members.

4. Click here to view the Basis of Issuance tables, effective October 1, 2015, for LIHEAP households with 11 to 20 members.

The remaining money is considered profit from the boarder payments.

If the budget group provides both room and board, the CAO or crisis contractor must do the following:

1. Total the amount of room and board being paid.

2. Subtract 40 percent.

3. Subtract the maximum SNAP benefit for the household size based upon the total number of boarders.

4. Click here to view the Basis of Issuance tables for households with 1 to 10 members.

5. Click here to view the Basis of Issuance tables for LIHEAP households with 11 to 20 members.

The remaining money is considered profit from the room and boarder payments.

Example: Mrs. Bates gets $30 per week for room and board from Mr. Hayes.

In cases where there are renters, boarders and roomer/boarders, the CAO or Crisis contractor must do the following:

1. From total room and apartment rent, subtract 50 percent.

2. From total room and board payments, subtract 40 percent.

3. From the board payments and the balance remaining of the room and board payments after the above deductions, subtract the maximum SNAP benefit for the household size based on the total number of boarders and roomer/boarders.

• Click here to view the Basis of Issuance tables for households with 1 to 10 members.

• Click here to view the Basis of Issuance tables for LIHEAP households with 11 to 20 members.

The amount remaining is considered profit and counted as gross earned income.

Example: Mrs. Denlinger rents 2 rooms, has 2 roomer/boarders and 2 boarders in her home. She receives $120 a month from room rent, $250 a month room-and-boarder payments and $160 a month boarder payments.

650.213 Income from Self-Employment Other than Renting Rooms, Providing Board or Renting an Apartment in the Applicant’s Resident Property

The CAO must compute monthly profit as follows:

1. Find the total of income expected from self-employment.

2. Deduct allowable costs of producing the income.

3. Divide the result by the number of months the income is supposed to cover.

Examples:

• Mrs. Brooke sells Avon. Her tax return from the previous year shows she had gross annual earnings of $12,000. Her allowable expenses for products, advertising and accounting fees are $5,000.

• Mr. Cooke has a landscaping and snow-plowing business. He told the CAO that he generally has no income for the winter months, because snowfall is relatively light in his area. His tax return for last year shows that he earned $24,000. He has allowable expenses for gas and oil, employee labor costs, interest payments on two four-wheel-drive lawn mowers and accounting fees.

650.214 Income from Nonresident Rental Property Managed by the Applicant

If the applicant owns and directly manages the property, the income must be treated as self-employment income. The CAO or Crisis contractor must determine profit as described in Section 650.21, above. When computing profit, the CAO or Crisis contractor must allow deductions for the verified costs of doing business. If the household does not provide proof of a business expense, the CAO or Crisis contractor must compute the profit without allowing a deduction for the unverified expense.

650.215 Income from Domiciliary Care

If a household is providing domiciliary care to an individual, the income received for providing the care would be counted as  self-employment income.

The individual being cared for would not be counted as a part of the household and their income would be excluded.

Reissued August 24, 2017, replacing July 22, 2016