Calculating net monthly income.

(1) Add the gross monthly income earned by all household members and the total monthly unearned income of all household members, subtract income exclusions, thereby determining the household's total gross income.

(3) Subtract the standard deduction as described in section 387.12(a) of this Part.

(4) Determine if the household is entitled to an excess medical deduction as described in section 387.12(c). If the medical expenses exceed $35, then subtract that portion which exceeds $35.

(5) Subtract monthly dependent care expenses, if any, as described in section 387.12, up to the maximum amount allowed.

(6) Deduct child support payments, if any, made to nonhousehold members as set forth in section 387.12 of this Part.

(7) Total the allowable shelter expenses as described in section 387.12 to determine shelter costs. Subtract from total shelter costs 50 percent of the household's monthly income after all the above deductions have been subtracted. The remaining amount, if any, is the excess shelter cost. If there is no excess shelter cost, the net monthly income has been determined.

(8) If there is excess shelter cost, compute the shelter deduction by subtracting the excess shelter cost up to the maximum amount allowed (unless the household is entitled to the full amount of its excess shelter expenses) from the household's monthly income after all other applicable deductions. Households not subject to a capped shelter expense (those having an aged or disabled member) will have the full amount exceeding 50 percent of their net income subtracted.