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8 b. On Line 2 of Section B, subtract the Living Allowance (Refer to Income Table VII. B.) for each ineligible child. If the ineligible child(ren) has any income, subtract their gross income from the Living Allowance and subtract the resulting amount on Line 2.
c. On Line 3 enter the ineligible spouse's unearned income (Line 1 minus Line 2).
d. Earned Income - Enter the ineligible spouse's gross earned income on Line 4 of Section B.
e. On Line 5 of Section B, subtract any portion of the Allowance allocation that remains after subtracting it from unearned income.
f. On Line 6 enter the amount of the ineligible spouse's earned income (Line 4 minus Line 5).
g. Enter total net countable income on Line 7 (Line 3 plus Line 6) and determine if income is to be deemed from the spouse. Refer back to Section IV.C. 13., to determine the a/b's classification.
(1) Categorically Needy (N)
If the a/b's income on Line 11 of Section A is less than or equal to the N income limit for an individual, determine spousal deeming based on the criteria below.
(a)If the amount on Line 7 of Section B is less than or…#
(a) If the amount on Line 7 of Section B is less than or equal to the current Living Allowance for an ineligible spouse, (Refer to Income Table V. B.), do not deem income from the ineligible spouse. Do not use Section C.
Determine eligibility for the a/b based on the N income limit for an individual established in Section A.
(b)If the amount of Line 7 of Section B is greater than…#
(b) If the amount of Line 7 of Section B is greater than the Living Allowance for an ineligible spouse, deem income from the ineligible spouse. Go to Section C.
(2) Medically Needy (M)
If the a/b's income on Line 11 of Section A is greater than the N limit for an individual, they may be eligible as M. Determine spousal deeming based on the criteria below.
(a) If the amount on Line 7 of Section B is less than or equal to 1/2 the M income level for an individual, do not deem income from the ineligible spouse. Do not use Section C.
Compute the a/b's deductible in Section A, using the M income limit for an individual.