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DEFINITION OF EARNED AND UNEARNED INCOME Income can generally be categorized as either earned or unearned, depending on its source. Unearned income requires no physical activity by the recipient and is usually in the form of a pension, benefit or compensation. Earned income is obtained through the individual s own efforts and is usually in the form of (1) wages, salary, or commissions received as an employee of another person or company or (2) profit gained through self-employment when the individual gives substantial services in connection with the enterprise. GROSS INCOME TESTED All earned and unearned income except that specifically disregarded must be tested against the gross income test. Consider as income only the amount actually received by an individual from a source such as RSDI when a part of the amount of entitlement is being withheld from the monthly payment to repay a prior overpayment received from that income source. The Social Security amount shown on page 1 of an IEVS BENDEX alert is the total of the individual s Social Security check including Medicare premium if paid by that individual (not state buy-in). If the Medicare premium is not state buy-in, the amount of the premium will be added to the amount shown on the monthly Social Security check, if the check is used to verify the income. Exception: Monies being withheld or recouped from a payment from a means-tested program to repay an overpayment that was caused by a household s failure to comply with the other program s requirements shall be income. Note that this does not apply when benefits are reduced to repay an overpayment caused by agency error. Examples of means-tested programs are TANF, General Assistance (GA), publicly funded housing or other assistance programs based on need. See Chapter 4, Earned Income To Be Averaged, for deducting business expenses from selfemployment income. Also, see Chapter 6, Budgeting Net Monthly Earned Income, for further discussion on budgeting income. NET INCOME TESTED Net income which must be tested against the 100% need standard includes unearned income and earned income after certain deductions are allowed from gross earnings. Countable support payments from an absent parent are included in the 100% test budget.

Volume III | Chapter 4 4010 MISSISSIPPI BASIC PRINCIPLES: DEFINITION OF EARNED AND UNEARNED INCOME

Revised 05 - 01 - 06