44-113 NET INCOME

(a) Rental of real Deduct from gross rental the

property includ- following expenses incident to

ing that in receipt:

which a life

estate is held. (1) Taxes and assessments.

STANDARDS OF ASSISTANCE

(2) Interest on encumbrance payments (do not deduct principal payments).

(3) Insurance.

(4) Utilities.

(5) Upkeep and major repairs.

If a complete dwelling unit is rented the county after consultation with the recipient (a) deducts the amount actually expended each month for upkeep and repairs; or (b) deducts 15% of the gross monthly rental plus $4.17 a month.

Note: The above expenses are prorated on the same periodic basis as the periodic basis on which the rental income is received (i.e., annually, quarterly, monthly, etc.). Multiply rental income received weekly by 4.33 to get monthly income.

Note: Under the ordinary life estate agreement, the life tenant is entitled to the use and/or income from the property and is responsible for the usual costs of ownership such as taxes, insurance, upkeep, etc. However, if the life estate agreement stipulates the remainderman is responsible for certain expenses, such payments do not represent income to the life tenant.

(b) Rental of rooms See Section 44-113.212 for computing self-employment net

and Room and Board income.

(c) Sale of real The interest received is net income (principal payments

property under represent conversion of property from real to personal

contract of property). Deduct any interest payments on prior

sale, title not encumbrances in determining net income from interest

passing. received from sale of real property under contract of sale.

(e) Personal property All interest received is net income, except interest on savings

(interest on money, accounts.

stocks, bonds, etc,)

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(f) Sale of crops

Deduct from gross income the following expenses which are incurred.

(1) Taxes and assessments.

(2) Interest on encumbrance payments (do not deduct principal payments.)

(3) Water cost.

(4) Necessary repair and minor replacement of buildings and equipment.

(5) Fertilizer, seed, insecticides, pruning, cultivation and harvesting costs.

(6) Rental of equipment.

(7) Wages.

(8) Losses on crops from the previous period.

(9) Other necessary expenses.

Prorate the annual expenses such as taxes, assessments, etc., according to the intervals at which the gross income was received. If other expenses cannot be identified with a particular period, determine the method which assures that the expenses are allocated as closely as possible to the period of crop income, and that on a continuing basis all necessary expenses are deducted from gross income.

(g) Sale of Livestock

Proceeds from the sale of the increase of livestock (i.e., that portion which represents a capital gain) is gross income. Deduct expenses incident to raising the livestock (such as feed, pasture rent, prorated personal property tax) in computing net income.

Since such income is usually received at intervals of more than one month, the same principles that apply to determining the periods of expense for the sale of crops, apply to the sale of livestock.

Note: Proceeds from the sale of an entire holding of livestock are not income but conversion of property.

STANDARDS OF ASSISTANCE

.2 Earnings

.21 Computation of Net Nonexempt Earned Income for CalWORKs

To determine the amount of Net Nonexempt Earned Income for the month, the following steps shall be taken:

.211 Determine the total amount of commissions, wages or salary earned as an employee that the AU received in the Data Month for SAR 7 or during the 30 days prior to submission for redeterminations, and any reasonably anticipated (see Section 44-101(c)(1)) changes to this income in the next SAR/AR/CO Payment Period (i.e., total income irrespective of expenses, voluntary or involuntary deductions). Also, the monetary value of any in-kind earned income per Section 44-115 shall be included. Do not include earnings exempted in entirety under Section 44-111.22.

.212 Determine the total monthly profit reasonably anticipated to be earned from self-employment by an applicant/recipient whose earnings are not exempted under Section 44-111.22 by offsetting the business expenses against the gross income from selfemployment in the Data Month for SAR 7 or during the 30 days prior to submission for redetermination. When the computation of total profit earned in a month from self-employment disclosed shows that a loss has occurred, earned income from self-employment for that month shall be zero. No additional offset shall be allowed against the family's other income. Unless the recipient reasonably anticipates a change, use this income amount to calculate the grant for the upcoming SAR/AR/CO Payment Period.

STANDARDS OF ASSISTANCE

(a) The applicant or recipient who is self-employed shall be informed by the County Welfare Department of their options to choose one of the following deductions:

(1) 40 percent of gross self-employed income, or

(2) reasonably anticipated self-employment expenses to the same extent allowed in the CalFresh Program (Section 63-503.41).

(b) Recipients who are self-employed shall be allowed to change the method of deduction identified in Section 44-113.212(a) only at redetermination or every six months, whichever occurs first.

.213 Combine the total monthly earnings for the family determined in Section 44-113.211 with the monthly net self-employment income determined in Section 44-113.212.

.214 Apply, as specified in Section 44-111.23, the disregard to the reasonably anticipated total monthly disability-based unearned income for the family.

.215 Apply up to of the remainder of the disability-based unearned income disregard to the reasonably anticipated total monthly earned income for the family as determined in Section 44-113.213.

.216 Apply the 50% disregard to any remaining earned income for the family.

.217 Add to the amount in Section 44-113.216 any excess nonexempt disability-based unearned income and/or any nonexempt unearned income. This total is the net nonexempt income available to the family.

.218 Add together the amounts remaining after application of the above sections for each recipient. This total is net nonexempt earned income for the Assistant Unit (AU).

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STANDARDS OF ASSISTANCE

.3 Net Income from Social Security, Railroad Retirement Benefits and Other Pensions

.31 Net income from Social Security or from Railroad Retirement Benefits is the amount determined to be paid to or on behalf of a member of the assistance unit in the SAR/AR/CO Payment Period except:

.311 When Social Security benefits are paid to a representative payee on behalf of a member of the assistance unit and the representative payee does not live in the same household as the assistance unit, the Social Security benefits are counted as income only to the extent that the representative payee makes them available for the support of the beneficiary.

.32 Net income from other types of pensions and similar sources is the amount reasonably anticipated for the SAR/AR/CO Payment Period or, if the individual is required to pay income tax on such income or has other required expenses in receiving such income, net income is the amount received less these expenses.

.4 Unrelated Adults, Including Unrelated Adult Males, Living in the Home

.41 Net income to the AU from an unrelated adult living in the home including an Unrelated Adult Male (UAM) is the sum of:

.411 Cash reasonably anticipated to be given to the AU in the SAR/AR/CO Payment Period which is available to meet the needs of the AU and:

.412 The value of full items of need reasonably anticipated to be provided in-kind to the AU in the SAR/AR/CO Payment Period. An item is not considered to be provided in-kind to the AU if the AU is receiving this full item of need in exchange for the AU providing the UAM with a different item. For example, if a UAM and a CalWORKs mother agree that he will pay the rent if she pays their food and utilities, the AU is not receiving in-kind income for housing.

STANDARDS OF ASSISTANCE

.42 Cash that is reasonably anticipated to be given to the AU in the SAR/AR/CO Payment Period does not include:

.421 Cash which is conditioned on its use for nonneed items for the AU, unrelated adult, or any other person.

.422 Cash designated by the unrelated adult to meet (1) their needs and expenses, including work-related expenses defined in Section 44-113, and/or (2) the needs and expenses of the unrelated adult's child(ren) or other unaided persons in the home the UAM is supporting.

.423 Cash which the CalWORKs mother and unrelated adult have specifically agreed constitutes the unrelated adult's share of the cost-of-living arrangement. For example, assume a UAM is required to make a financial contribution of $182 to the AU. (See Section 43-109.1 and .2.) If the UAM and CalWORKs mother agree that the UAM's share of the cost-of-living is $200 and the UAM gives the mother his $200 share, no part of this $200 is available to meet the needs of the AU.

.424 Any other amounts which the unrelated adult designates as not available to the AU.

.43 When the unrelated adult's income is pooled with those of the AU, the pooled income is treated as if cash were given to the AU.

.44 The value of full items of need provided to the AU is determined according to Section 44-115.3. For example, assume that a UAM and his child live with a CalWORKs mother and her two children. If the UAM pays the entire $300 rent to the landlord, the value of the full item of need to the AU is the lesser of (1) the in-kind income table amount for housing for three; or (2) 3/5 of $300 ($180). If the in-kind income table amount were $163, the amount of in-kind income for housing to the AU would be $163.

.5 Child/spousal support which is reasonably anticipated to be paid during the SAR/AR/CO Payment Period to the AU by the absent parent and not forwarded to the county shall be considered available income except as specified in Section 44-111.47.

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STANDARDS OF ASSISTANCE

.6 Refunds of Retirement Contributions

.61 Nonrecurring lump sum refunds of the employer's share of retirement contributions shall be treated as property (see Section 42-209.2).

.62 Recurring interest earned on accumulated retirement contributions shall be treated as income in the month it is reasonably anticipated to be received. If the interest payment is nonrecurring, it shall be treated as property (see Section 42-209.2).

.7 Death Benefits

Net Income from death benefits is the amount remaining after deducting the actual expenses of the funeral, cremation, or burial of the insured. Such expenses must be verified by the recipient with acceptable evidence.

.71 Nonrecurring lump sum death benefits are considered property in the month received as provided in Section 42-209.2.

.72 Recurring death benefits are countable net income in the month received.

.8 Income from Payments Which Include Compensation for Converted Property (see Section 44-105)

That portion of a payment defined in Section 44-105.3 which exceeds the value of the converted property and is recurring in nature is income. If that portion of the payment that is to be received is nonrecurring it shall be treated as property (see Section 42-209.2).

Net income is that income which remains after deducting the following expenses if the recipient shows the expenses were paid by the recipient while they were a recipient and were directly related to the receipt of the payment.

.81 Attorney's fees

.82 Litigation expenses

.83 Medical expenses

.84 Other necessary and required expenses.

STANDARDS OF ASSISTANCE

NOTE: Authority cited: Sections 10553 and 10554, Welfare and Institutions Code; SB 72 (Chapter 8, Statutes of 2011, Section 42), and Senate Bill 80 (Chapter 27, Statutes of 2019, Section 136). Reference: Sections 10063, 10553, 11008, 11008.19, 11017, 11155.3, 11157, 11265, 11265.1, 11265.2, 11265.3, 11450, 11450.5, 11450.12, 11451.5 and 11453, Welfare and Institutions Code; 45 CFR 233.10; 45 CFR 233.20(a)(3)(ii)(C); 45 CFR 233.20(a)(3)(iv)(B);45 CFR 233.20(a)(3)(vi)(A); 45 CFR 233.20(a)(3)(xxi); 45 CFR 233.20(a)(4)(ii)(d); 45 CFR 233.20(a)(4)(ii)(p); 45 CFR 233.20(a)(6)(v)(B); 45 CFR 255.3; Darces v. Woods (1984) 35 Cal. 3d 871; and Ortega v. Anderson, Case No. 746632-0 (Alameda Superior Court) July 11, 1995.