May 2003Chapter 8: Case Study 2- Bennett1 HUD RHIIP Training Case Study 2: Bennett Family (Public Housing)

May 2003Chapter 8: Case Study 2- Bennett2 Bennett Case Study: Process Overview Topic presentation Students complete case study – Using Appendix C, File Review Checklist Worksheets Students review PHA’s HUD Students complete Appendix A, Tenant File Review Checklist Review correct checklist and HUD 50058

May 2003Chapter 8: Case Study 2- Bennett3 Bennett Case Study: Topics Annual Income – Self Employment – Imputed Welfare Income Imputed Welfare Income and (PH) MEID

May 2003Chapter 8: Case Study 2- Bennett4 Bennett Case Study: Topics Rent Calculation – Mixed family rent calculation Income based rent Flat rent

May 2003Chapter 8: Case Study 2- Bennett5 Self-employment

May 2003Chapter 8: Case Study 2- Bennett6 Self-employment Income Treat as operation of a business/profession – Count net income

May 2003Chapter 8: Case Study 2- Bennett7 Self-employment Income Net income is – gross income less business expenses interest on loans depreciation – Use straight line depreciation – see IRS guidelines withdrawal of cash/assets for reimbursement of family’s investments in the operation

May 2003Chapter 8: Case Study 2- Bennett8 Self-employment Income Do not deduct expenses for expansion or capital improvements

May 2003Chapter 8: Case Study 2- Bennett9 Self-employment Income Estimating anticipated income for self- employment may be difficult – Family may not keep formal records Family could maintain a monthly log of income and expenses for PHA – Use average over a period of 3 or more months

May 2003Chapter 8: Case Study 2- Bennett10 Self-employment Income Interim recertifications may be required to reflect changing circumstances

May 2003Chapter 8: Case Study 2- Bennett11 Self-employment Income: Example Mary James sells beauty products door-to- door, on consignment November/December are biggest sales months but has sales all year long Has no formal records of income except IRS form 1040 What should be used to determine annual income?

May 2003Chapter 8: Case Study 2- Bennett12 Self-employment Income: Example Answer: With no other information available, use the income reflected on her form 1040 as her annual income.

May 2003Chapter 8: Case Study 2- Bennett13 Self-employment Income: Other IRS Forms applicable to self- employment – Schedule C: Profit or Loss From Business – Schedule E: Supplemental Income and Loss – Schedule F: Profit or Loss from Farming Copies under reference tabs

May 2003Chapter 8: Case Study 2- Bennett14 IRS Resources – Other IRS Forms Form 4506: Request for Copy/Transcript of Tax Form – Can order tax return transcript 1040 series during current calendar year and 3 years prior – Verification of nonfiling – Form W-2 Information – Copy of tax forms and all attachments including W-2 $23 charge for each tax year Requested items will be sent to taxpayer

May 2003Chapter 8: Case Study 2- Bennett15 IRS Resources – Other IRS Forms Form 8821: Tax Information Authorization – Can be sent to Appointee (PHA)

May 2003Chapter 8: Case Study 2- Bennett16 IRS Resources – Other IRS Forms IRS Letter 1722 – Tax account listing – Shows Filing status Exemptions claimed Adjusted gross income Taxable income Taxes paid – Family can obtain by calling

May 2003Chapter 8: Case Study 2- Bennett17 Imputed Welfare

May 2003Chapter 8: Case Study 2- Bennett18 Imputed Welfare Income Congress has now linked welfare reform to housing reform

May 2003Chapter 8: Case Study 2- Bennett19 Imputed Welfare Income QHWRA established two situations where PHAs cannot reduce rents when families have welfare benefits reduced – Welfare fraud – Non-compliance with economic self- sufficiency requirements

May 2003Chapter 8: Case Study 2- Bennett20 Imputed Welfare Income Instead of reducing rent, PHA must “impute” welfare income equal to the amount of reduction in welfare benefits Only applies to families who are required to participate in economic self- sufficiency activities in order to receive full welfare benefits

May 2003Chapter 8: Case Study 2- Bennett21 Imputed Welfare Income Does not apply if reason for welfare benefit reduction is: – Expiration of lifetime or other time limits on welfare benefits – Economic self-sufficiency requirements completed but family member cannot find job

May 2003Chapter 8: Case Study 2- Bennett22 Imputed Welfare Income Does not apply if reason for welfare benefit reduction is… – Noncompliance with a non self- sufficiency requirement – Because of an earlier inadvertent overpayment

May 2003Chapter 8: Case Study 2- Bennett23 Imputed Welfare Income Verification must be obtained from welfare agency of: – Amount of the welfare reduction – Term of the reduction – Reason for the reduction – Any subsequent changes in the reduction

May 2003Chapter 8: Case Study 2- Bennett24 Imputed Welfare Income PHA must rely on information provided by welfare agency

May 2003Chapter 8: Case Study 2- Bennett25 Imputed Welfare Income After verification the PHA is required to compute rent exactly as if the welfare benefit reduction had not occurred, until: – Reduction ceases, or – Resident obtains some additional type of income

May 2003Chapter 8: Case Study 2- Bennett26 Imputed Welfare Income If the family has imputed welfare benefits and their income from other sources then increases: – the increase offsets (takes the place of) the imputed welfare income instead of simply being added to the family’s overall income – when new income equals or exceeds imputed welfare benefits, imputed welfare is no longer counted

May 2003Chapter 8: Case Study 2- Bennett27 Imputed Welfare Income: Example Monica Smith’s welfare grant was reduced due to failure to comply with economic self-sufficiency, as verified by welfare agency Original grant was $500 but is now reduced to $300, for 12 months

May 2003Chapter 8: Case Study 2- Bennett28 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months What is her monthly – Imputed Welfare Benefit – Total Income – counted for rent calculation?

May 2003Chapter 8: Case Study 2- Bennett29 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months What is her monthly: $200 – Imputed Welfare Benefit $200 $500 – Total Income counted for rent calculation $500

May 2003Chapter 8: Case Study 2- Bennett30 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months Two months later, Monica gets a job earning $150 per month How will her income be reported?

May 2003Chapter 8: Case Study 2- Bennett31 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months Two months later, Monica gets a job earning $150 per month How will her income be reported? – $300 Welfare cash payment – $150 Employment income – $ 50 Imputed Welfare Benefit

May 2003Chapter 8: Case Study 2- Bennett32 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months Now, Monica earnings increase to $250/mo How will her income now be reported?

May 2003Chapter 8: Case Study 2- Bennett33 Imputed Welfare Income: Example Original grant was $500 but is now reduced to $300, for 12 months Now, Monica earnings increase to $250/mo How will her income now be reported? – $300 Welfare cash payment – $250 Employment income – $ 0 Imputed Welfare Benefit

May 2003Chapter 8: Case Study 2- Bennett34 Imputed Welfare Income: Example Monica’s total monthly income will increase to $550 because the income increase from employment that occurred after the welfare benefit reduction is greater than the amount of the welfare benefit reduction.

May 2003Chapter 8: Case Study 2- Bennett35 Imputed Welfare Income A family who has an imputed welfare benefit reduction will never pay less than the rent that was based on the former welfare income

May 2003Chapter 8: Case Study 2- Bennett36 Imputed Welfare Income If the welfare benefit reduction occurred prior to admission, there is no imputed welfare benefit – the PHA counts only the amount of actual cash benefits received

May 2003Chapter 8: Case Study 2- Bennett37 Imputed Welfare and MEID Families who have welfare income imputed may qualify for the earned income disallowance when they go to work Include the imputed welfare income as part of the baseline income (prior to the earned income increase)

May 2003Chapter 8: Case Study 2- Bennett38 Imputed Welfare and MEID - Example Evelyn Jones’s full monthly welfare benefit was $500 ($6,000/yr) prior to $150 sanction Evelyn found a job paying $1500 per mo and she qualifies for the earned income disallowance How is Evelyn’s income calculated?

May 2003Chapter 8: Case Study 2- Bennett39 Imputed Welfare and MEID – Example Answer Answer: The $150 imputed welfare income plus the $350 welfare cash payment make up Monica’s $500 baseline for the disallowance ($6,000 annually)

May 2003Chapter 8: Case Study 2- Bennett40 Imputed Welfare and MEID: Answer If welfare benefits end after employment: – count first $500 of employment income – exclude the remaining $1000 as the disallowance during full exclusion period ($1,000 is the incremental increase)

May 2003Chapter 8: Case Study 2- Bennett41 Welfare Benefits End After Employment

May 2003Chapter 8: Case Study 2- Bennett42 Answer continued If welfare (and sanction) continue after employment: – Count $350 welfare plus $150 of employment income (which offsets $150 imputed welfare income), keeping pre-employment income counted at $500, and…

May 2003Chapter 8: Case Study 2- Bennett43 Answer continued If welfare (and sanction) continue after employment… – Exclude remaining $1350/mo employment income as the disallowance during full exclusion period

May 2003Chapter 8: Case Study 2- Bennett44 Welfare & Sanction Continue After Employment

May 2003Chapter 8: Case Study 2- Bennett45 Mixed Family Rent Calculation

May 2003Chapter 8: Case Study 2- Bennett46 Mixed Family Rent Calculation Mixed families are those families comprised of some eligible family members and some ineligible family members

May 2003Chapter 8: Case Study 2- Bennett47 Mixed Family Rent Calculation Eligible family members may be: – Citizens, including naturalized citizens – Nationals (owe permanent allegiance to USA) – Noncitizens who have eligible immigration status

May 2003Chapter 8: Case Study 2- Bennett48 Mixed Families Ineligible family members include: – Noncitizen students on a student visa, and their noncitizen family members – Family members choosing not to contend their citizenship status (noncontending members)

May 2003Chapter 8: Case Study 2- Bennett49 Mixed Families The number of ineligible family members will determine the proration of rent

May 2003Chapter 8: Case Study 2- Bennett50 Prorated Rent Calculation (PH) Step 1: –Determine TTP as you normally would Step 2: –Subtract TTP from PHA’s Public Housing maximum rent to get maximum subsidy (if all members were eligible) CFR 5.520

May 2003Chapter 8: Case Study 2- Bennett51 Prorated Rent Calculation (PH) Step 3: –Divide maximum subsidy by number of family members to get “member maximum subsidy” Step 4: –Multiply member maximum subsidy by number of eligible family members (results in eligible subsidy)

May 2003Chapter 8: Case Study 2- Bennett52 Prorated Rent Calculation (PH) Step 5: –Subtract eligible subsidy from PH maximum rent to get prorated TTP Step 6: –Subtract Utility Allowance from prorated TTP to get the Tenant Rent for a mixed family

May 2003Chapter 8: Case Study 2- Bennett53 Prorated Rent Calculation: Example (PH) Jones family has 6 members. – Four are eligible citizens – Two are noncontending members – PHA’s PH maximum rent is $600 – Family’s TTP is $250 – Utility Allowance is $50

May 2003Chapter 8: Case Study 2- Bennett54 Prorated Rent Calculation (PH) Public Housing Maximum Rent$600 Minus TTP Family Maximum Subsidy = 350 Family Maximum Subsidy$350 Divided by total family members / 6 Equals Member Maximum Subsidy = 58.33

May 2003Chapter 8: Case Study 2- Bennett55 Prorated Rent Calculation (PH) Member Maximum Subsidy (before rounding) $ Times number of eligible family members x 4 Equals Eligible Subsidy = $ 233

May 2003Chapter 8: Case Study 2- Bennett56 Prorated Rent Calculation (PH) Public Housing Maximum Rent $600 Minus Eligible Subsidy Equals Revised TTP = $367 Minus Utility Allowance - 50 Equals Prorated Tenant Rent = $317 The Jones family will pay $117 more in rent ( ) due to the presence of two ineligible members.

May 2003Chapter 8: Case Study 2- Bennett57 Prorated Flat Rent (PH) If a mixed family requests flat rent instead of income based rent and the flat rent is less than the Public Housing maximum rent, then the flat rent needs to be prorated (unlikely) Formula found in Appendix 3 of form HUD Instruction Booklet

May 2003Chapter 8: Case Study 2- Bennett58 Prorated Flat Rent (PH) First compare the unit Flat Rent with the PHA maximum rent. – If maximum rent is less than or equal to flat rent, do not prorate flat rent – If maximum rent is greater than flat rent, must follow the steps in Appendix 3

May 2003Chapter 8: Case Study 2- Bennett59 Mixed Family Flat Rent > Maximum Rent Example 1 Mary Jones, a mixed family, asks for Flat Rent – Flat Rent is $700 – PHA Maximum Rent is $500 Since Flat Rent is greater than Maximum Rent, use Flat Rent with no proration

May 2003Chapter 8: Case Study 2- Bennett60 Mixed Family Flat Rent < Maximum Rent Example 2 Johnny James, a mixed family, asks for Flat Rent – Flat Rent is $550 – PHA Maximum Rent is $600 – Total number in family = 5 – Total number eligible = 4 Since Maximum Rent is greater than Flat Rent, proceed with proration of Flat Rent

May 2003Chapter 8: Case Study 2- Bennett61 Mixed Family Flat Rent: Example 2 Maximum Rent$ 600 Minus Flat Rent- 550 Equals Family Maximum Subsidy =$ 50 Maximum Family Subsidy$ 50 Divided by total number in family / 5 Equals= 10 Times total number eligible x 4 Equals Eligible Subsidy=$40

May 2003Chapter 8: Case Study 2- Bennett62 Mixed Family Flat Rent: Example 2 PHA Maximum Rent$ 600 Minus Eligible Subsidy- 40 Equals Prorated Flat Rent$ 560 The James family will pay $10 more in flat rent ( ) due to the presence of one ineligible family member.

May 2003Chapter 8: Case Study 2- Bennett63 Monitoring Review

May 2003Chapter 8: Case Study 2- Bennett64 Bennett Case Study: Process Overview Ground Rules – Objective: complete case study – Time: Approximately 1 hour – Work individuallly – Trainer and trainer aides will assist if needed – Please keep noise volume to a minimum

May 2003Chapter 8: Case Study 2- Bennett65 Bennett Case Study: Process Overview Instructions for Part 1 1.Review PHA file data and complete Appendix C (Tenant file review worksheets)

May 2003Chapter 8: Case Study 2- Bennett66 Bennett Case Study: Process Overview Resources for case study – Case information begins page 8-13 – Verifications (pg 8-23) – Appendix C, Tenant File Review Checklist Worksheets (pg 8-41) – Cubzide PHA Policies/Schedules (pg 6-5)

May 2003Chapter 8: Case Study 2- Bennett67 Bennett Case Study: Process Overview Instructions for Part 2 1.Review PHA’s HUD (Handout) 2.Complete Appendix A, Tenant File Review Checklist to record discrepancies

May 2003Chapter 8: Case Study 2- Bennett68 Annual Income Table Answer

May 2003Chapter 8: Case Study 2- Bennett69 Dwelling Unit/ Utility Allowance Worksheet What did you put for the Total Utility Allowance?

May 2003Chapter 8: Case Study 2- Bennett70 Adjusted Income Worksheet Answer

May 2003Chapter 8: Case Study 2- Bennett71 Adjusted Income Answer

May 2003Chapter 8: Case Study 2- Bennett72 Adjusted Income Answer

May 2003Chapter 8: Case Study 2- Bennett73 Adjusted Income Answer

May 2003Chapter 8: Case Study 2- Bennett74 Adjusted Income Answer

May 2003Chapter 8: Case Study 2- Bennett75 Total Tenant Payment Answer

May 2003Chapter 8: Case Study 2- Bennett76 Prorated TTP and Tenant Rent - Answer

May 2003Chapter 8: Case Study 2- Bennett77 Review Appendix A Discussion

May 2003Chapter 8: Case Study 2- Bennett78 Thinking Points PH Maximum Rent –Has the PHA established PH Maximum Rent using HUD formula? Third party verification –Has the PHA documented why it was unable to obtain third party verification if review of documents was used?

May 2003Chapter 8: Case Study 2- Bennett79 Thinking Points Imputed welfare – –Has PHA received all needed information from welfare? –Does PHA correctly offset amount of imputed welfare income when additional amounts come into the family after sanction begins?