Methods for Projecting and Calculating Annual Income

• A. The requirements for determining whether a family is eligible for assistance, and the amount of rent the family will pay, require the owner to project or estimate the annual income that the family expects to receive. There are several ways to make this projection. The following are acceptable methods for calculating the annual income anticipated for the coming year:

  1. Generally the owner must use current circumstances to anticipate income. The owner calculates projected annual income by annualizing current income. Income that may not last for a full 12 months (e.g., unemployment compensation) should be calculated assuming current circumstances will last a full 12 months. If changes occur later in the year, an interim recertification can be conducted to change the family’s rent.

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2. If information is available on changes expected to occur during the year, use that information to determine the total anticipated income from all known sources during the year.

3. *Using EIV:

   • (a) The owner must not use the quarterly wage income reported on the EIV Income Report for calculating the tenant’s annual income from employment. The owner must confirm with the tenant that the information in EIV is correct. If the tenant agrees that the employment information reported in EIV is correct, the owner must:

     • (1) Use the Income Report as third party verification of the tenant’s employment; and

     • (2) Use tenant provided documents for calculating the tenant’s annual income, e.g. 4-6 current, consecutive check stubs.

Example 1 : EIV shows that John is working at Jack’s Restaurant and John agrees that he is working there. John has brought in his four most current, consecutive check stubs. The owner must use the EIV Income Report as third party verification that John is employed at Jack’s Restaurant and use the gross pay shown on the check stubs provided by the tenant for determining John’s annual income. John is paid weekly.

Check stubs – gross pay 1) $120; 2) $145; 3) $125; 4) $130 – total gross pay = $520 $520 / 4 = $130 average gross pay per week

$130 x 52 weeks = $6,760 gross annual income

Example 2 : EIV shows Sally works at Beauty World and Sally agrees that she is working there. Sally has brought in a payroll summary report prepared by her employer which shows that Sally works 30 hours per week and earns $12.50 per hour. The owner must use the EIV Income Report as third party verification that Sally is employed at Beauty World and use the payroll summary report prepared by Beauty World for determining Sally’s annual income.

30 hours x 52 weeks = 1,560 hours per year

$12.50 per hour x 1,560 hours = $19,500 gross annual income

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• b. The owner must not use the quarterly unemployment compensation benefits reported on the EIV Income Report for calculating the tenant’s annual income from unemployment. The owner must confirm with the tenant that the unemployment information in EIV is correct. If the tenant agrees that he/she is receiving unemployment compensation benefits as reported in EIV, the owner must:

  • (1) Use the Income Report as third party verification that the tenant is receiving unemployment; and

  • (2) Use tenant provided documents for calculating annual income, e.g. unemployment monetary benefit notice.

Example: Peter has brought in the unemployment benefit notice he received showing he is being paid weekly unemployment benefits of $175. The owner will use the EIV Income Report as third party verification that Peter is receiving unemployment benefits and the unemployment benefit notice for determining Peter’s annual income. $175 per week x 52 weeks = $9,100.00 gross annual income

NOTE: If Peter’s unemployment is terminated during the annual recertification period, Peter should report this to the owner along with documentation supporting the date of termination of the benefits. The owner will then prepare an interim recertification removing the unemployment income. If Peter is unable to provide documentation verifying termination of unemployment compensation benefits, the owner must verify the termination directly with the state workforce agency (SWA) source.

• c. If the tenant agrees with the social security benefit information on the EIV Income Report, the owner must use the EIV Income Report as third party verification, receiving social security benefits and also for calculating the tenant’s annual income.

Example: The Income Report shows that Joe Smith is receiving gross social security benefits of $980.40 per month. Joe agrees that this is the amount he is receiving. The owner will use the Income Report as third-party verification that Joe is receiving social security benefits and for calculating Joe’s annual income.

$980.40 x 12 months = $11,764.80 (rounded to $11,765) gross annual income.

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• d. If the tenant disputes the employment and income information in EIV, the owner must obtain third party verification from the source.*

• B. Once all sources of income are known and verified, owners must convert reported income to an annual figure. Convert periodic wages to annual income by multiplying:

  1. Hourly wages by the number of hours worked per year (2,080 hours for full-time employment with a 40-hour week and no overtime);

  2. Weekly wages by 52;

  3. Bi-weekly wages (paid every other week) by 26;

  4. Semi-monthly wages (paid twice each month) by 24; and

  5. Monthly wages by 12.

To annualize other than full-time income, multiply the wages by the actual number of hours or weeks the person is expected to work.