Treatment of income and deductions under retrospective budgeting.

(i) Income. Local departments shall calculate a household's benefits using actual income from the budget month, except the local department shall:

(a) annualize and average self-employment income as prescribed in this Part;

(b) prorate income received by contract in less than one year over the period the income is to cover; and

(c) prorate nonexcluded scholarships, deferred educational loans, and other educational income over the period they are intended to cover.

(ii) Shelter expenses. A household's reported shelter expenses shall be budgeted on a prospective basis.

(iii) Dependent care/medical deductions. A household's medical and dependent care costs shall be budgeted retrospectively using the household's medical and dependent care as of the budget month.

(iv) Terminated source of income. Income from any source of income which a household will no longer be receiving following its beginning months shall be disregarded when determining the household's ongoing benefit level which is being determined retrospective budgeting; usually in determining a household's benefits for their third month of participation. In addition, any income from a source which has been terminated shall be disregarded when determining a household's budget level under retrospective budgeting for the issuance month following the month in which the household informs the local department that the source has been terminated.

(v) Gaining a household member. When a household indicates in its processing month that it anticipates gaining a household member, that individual and his income shall be counted for both eligibility and benefit calculation purpose for the issuance month.

(vi) Losing a household member. When a household indicates in its processing month that it anticipates a household member is leaving prior to the issuance month, the local department shall not count either the person or his/her income for the issuance month.

(vii) Budgeting public assistance grants. When determining the food stamp benefit level for a given issuance month, the amount of the public assistance grant to be considered as income for that month shall be the amount of the public assistance grant that is to be issued; i.e., public assistance grants are budgeted prospectively for food stamps in the issuance month. Other income continues to be budgeted retrospectively.