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DEPARTMENT FOR AGING AND REHABILITATIVE SERVICES AUXILIARY GRANT PROGRAM NON-SSI INCOME SOURCES 07/19 CHAPTER I, PAGE 75

Evaluate royalties that are earned income as wages. See Wages Chapter I – 75. 58.1.2. When Royalties Are Unearned Income Royalties that are not earned income are unearned income and are subject to the unearned and general income exclusions. 58.1.3. Gross vs. Net Income When documents concerning royalty payments provide both a gross and a net payment amount, you must determine which figure to use. • When the difference between the gross and the net figures is due to income taxes withheld or windfall profit tax deductions, use the gross figure when determining income. • When the difference between the gross and net figures represents a production or severance tax, use the net figure when determining income. The production or severance tax is a cost of producing the income and, therefore, is deducted from the gross income. (e.g., most oil royalties will be reduced by this tax.) 58.2. Verification • Verify that payments received meet the definition of royalty by obtaining a copy of the agreement between the parties involved. If the agreement is unclear, unavailable, or informal, contact the company or source of the payment. • Verify the amounts and frequency of royalty payments by examining documents in the individual's possession. If documents are unclear or unavailable, contact the company or source of the royalty.