Treatment of Unearned Income from Private Sources
Subject: Treatment of Unearned Income from Private Sources
To: Regional Directors / Food Stamp Program
Recent regulatory and waiver policy has been focused on allowing States
to simplify the reporting of changes in earned income. There has been
increasing interest in addressing reporting and budgeting of certain types
of fluctuating unearned income as well.
We are announcing several waivers to allow State agencies to simplify
the budgeting and reporting of unearned income. There are numerous kinds
of unearned income that not only fluctuate, but are unanticipated, making
budgeting and reporting of this income difficult. For example, a household
may receive child support payments of $50 in January, $30 in March, and
$100 in May. This income is generally paid by private individuals directly
to the household and includes payments such as child support, alimony
and gifts. It does not include unearned income from Federal, State, or
local government agencies (such as TANF or SSI), private institutions
(banks), or other corporations (former employers) as payments from these
sources are generally anticipated by the recipient and or known to the
Through this memo, we are advising you of several waivers that are available
that we believe might simplify how unearned income from private sources
is budgeted and reported for food stamp purposes. In addition, we are
clarifying existing policy concerning budgeting and reporting such income.
Waiver Option One - 7 CFR 273.12(a)(2)
State agencies may request a waiver of 7 CFR 273.12(a)(2), reporting
changes. Households subject to retrospective (without monthly reporting)
and prospective budgeting would not be required to report changes in unearned
income from private sources during the certification period if the amount
of this income was averaged over the certification period. For example,
a household receives intermittent, fluctuating alimony payments for several
months prior to application. A State agency would average this unearned
income and use that amount to budget for the upcoming certification period
(an appropriate time period for averaging this income may be as long as
six months). Households would not be required to report deviations from
this averaged amount during the certification period. A State agency would
be required to act on reported changes only if it determined that the
change is ongoing and would change the averaged amount. If an averaged
amount was not taken into consideration at certification, and a household
reports a new source of such income, the State agency would be required
to act on this change.
Waiver Option Two: 7 CFR 273.21(f)(2)
State agencies may request a waiver of 7 CFR 273.21(f)(2). For households
that are subject to monthly reporting and retrospective budgeting, State
agencies could prospectively budget unearned income from private sources.
Under normal circumstances, a household would be required to report changes
in income that was prospectively budgeted in accordance with 7 CFR 273.12.
However, if the State agency also had the waiver described in option one,
the household would not have to report a change in unearned income from
private sources during the certification period. Or, if a household could
not reasonably anticipate receiving alimony during the certification period,
then the State agency would not use alimony to budget for the upcoming
Waiver Option Three: 7 CFR 273.12(a)(1)
State agencies may apply for a waiver to allow households to report a
change of $100 as opposed to a change in $25 in unearned income from private
7 CFR 273.10(c)(1) provides that, "If the amount of income that
will be received, or when it will be received, is uncertain, that portion
of the household’s income that is uncertain shall not be counted by
the State agency." For example, a household has received child
support payments of differing amounts only twice in the past six months.
The amount of this income, and when it will be received again, is uncertain.
Therefore the State agency should not count child support when anticipating
income for the certification period.
7 CFR 273.10(c)(2) provides, "Income anticipated during the certification
period shall be counted as income only in the month it is expected to
be received, unless the income is averaged." For example, a household
usually gets one child support payment a month. However, in the month
of June, the household receives two, one for the previous month and
one for the current month. The additional payment should be counted
for the month it was expected to be received (May) and not when it was
actually received (June). Likewise, if a payment is received early,
such as if two payments are received in May for the months of May and
June, then the additional payment should be counted for the month it
was expected to be received (June), and not when it was actually received
7 CFR 273.9(c)(8) provides that money received in the form of a non-recurring
lump-sum payment, including retroactive lump sum payments, shall not
be counted as income in the month it is received. For
example, a household receives a lump sum payment for six months of back-owed
child support. This payment should not be counted as income.
Please advise your State agencies of these policy clarifications regarding
the treatment of unanticipated income, as well as to the availability
of these waivers. Please work with them to submit requests.
Arthur T. Foley
Director, Program Development Division