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Library: Policy

340:10-3-31. Earned income

Revised 7-1-12

(a) The term earned income refers to monies earned by an individual through the receipt of wages, salary, commission, or profit from activities in which the individual is engaged as self-employed or as an employee.  A person is considered self-employed when:

  • (1) he or she declares himself or herself to be self-employed;

  • (2) there is an employer/employee relationship and the employer does not withhold income taxes or Federal Insurance Contributions Act (FICA), even if required by law to do so; or

  • (3) the employer withholds taxes and the person provides proof he or she files taxes as self-employed.

(b) Payments made for accumulated annual leave, vacation leave, sick leave, or as severance pay are considered as earned income whether paid during employment or at termination of employment.  • 1  Temporary disability insurance payment(s) and temporary worker's compensation payments are considered as earned income if payments are employer funded and the individual remains employed.

(c) Earned income received as a one-time nonrecurring payment is considered as a lump sum payment per OAC 340:10-3-28

(d) Earned income includes in-kind benefits received by an employee from an employer in lieu of wages or in conjunction with wages.  An exchange of labor or services, for example, barter, is considered as an in‑kind benefit.  Such benefits received in-kind are considered as earned income only when the employee and employer relationship has been established.  • 2

  • (1) The cash value of the in-kind benefits must be verified by the employer.

  • (2) Income from self-employment also includes in-kind benefits for a work activity or service for which the self-employed person ordinarily receives payment in the business enterprise.

  • (3) Medical insurance secured through the employer, whether purchased or as a benefit, is not considered in-kind income.  • 3

(e) Gross earned income is used to determine eligibility for assistance.  Gross earned income is defined as the "true wage" prior to payroll deductions and withholdings.  Income that is based on the number of hours worked as opposed to income based on regular monthly wages must be computed as irregular income.  • 4

(f) Countable earned income excludes income from:

  • (1) capital investments with respect to which the individual is not actively engaged.  Dividends and interest on rental properties in the hands of a rental agent with the check forwarded to the recipient is excluded from "earned income;" and  • 5

  • (2) benefits not in the nature of wages, salary, or profit accruing as compensation or reward for services, or as compensation for lack of employment.  • 6

(g) The worker verifies income by the best available information such as pay stubs presented by the individual or an interview with the employer.  The worker verifies medical insurance which may be available to the employed Temporary Assistance for Needy Families (TANF) recipient and any dependents at the same time that income is verified.

  • (1) Pay stubs may only be used for verification if they have the individual's name or social security number indicating that the pay stubs are in fact the individual's wages.  The stubs must include the date(s) of the pay period and the amount of income before deductions.  If this information is not included, employer verification is required.

  • (2) With new employment, it is necessary to verify the beginning date.

  • (3) When a member of the assistance unit accepts employment and has not received any wages, verification of the amount of income to be considered and the anticipated date of receipt must be obtained from the employer.  • 4

  • (4) Verified income expected to be received during a future month is considered available to the assistance unit and is counted in determining eligibility for that month.  • 7

Revised 7-1-12

1.Refer to OAC 340:10-3-5(a)(9)(D); 340:10-3-28(1); and 340:10-3-39(h) for retirement benefits.

2.The employer's and employee's written or verbal statement that the relationship exists is sufficient but must be documented in the case record.

3.The worker records details about medical insurance in the TPL tab of the Family Assistance/Client Services (FACS) Interview Notebook and in case notes.

4.Refer to OAC 340:10-3-58 for income determination procedures.

5.Refer to OAC 340:10-3-39 for income other than earned income.

6.Examples include pensions and benefits, such as United Mine Workers' or Veterans benefits.

7.For self-employment income, refer to OAC 10-3-32 Instructions to Staff #2.

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