Okla. Admin. Code § 340:40-7-11

Current through Vol. 42, No. 6, December 2, 2024

Section 340:40-7-11 - Income sources considered

(a)Income sources considered. Income may be received periodically or at irregular intervals. All income, unless specifically excluded, per Oklahoma Administrative Code (OAC) 340:40-7-12, is considered in determining monthly gross income. Income is classified as earned or unearned income.

(b)Earned income. Earned income is the total money a person receives from wages, salary, commission, or profit from activities he or she engages in as a self-employed person or as an employee.

(1)Wages. Wages include total money earned for work performed as an employee including armed forces pay, commissions, tips, piece-rate payments, longevity payments, and cash bonuses before deductions, such as taxes, bonds, pensions, union dues, credit union payments, or cafeteria plans are subtracted.

(A) Countable military personnel wages include any allowance included on the earnings statement, except the Basic Allowance for Housing (BAH).

(B) Only the portion of the cafeteria plan the client controls, including any excess benefit allowance payments, is counted as income.

(C) Reimbursements for expenses, such as a uniform allowance or transportation costs, other than daily commuting, are subtracted from the gross income.

(D) Payments made for annual leave, sick leave, or severance pay are considered earned income during the month such income is received, whether paid during employment or at employment termination.

(E) Wages that are garnished or diverted and paid to a third party are also counted as income.

(2)S corporations. When a household member is a shareholder in an S corporation, he or she may receive profits from the business in three ways; as a salary, as a profit share of the business, or both. Both types of income are reported on the household member's personal income tax return. Salary income is considered as earned income and profit share income is considered as unearned income, per (c)(11) of this Section.

(3)Self-employment. Self-employment income is calculated based on procedures listed in (A) through (H) of this subsection.

(A)Persons considered self-employed. A person is considered self-employed when:

(i) he or she declares himself or herself to be self-employed;

(ii) there is an employer/employee relationship and the employer does not withhold income taxes or Federal Insurance Contributions Act, even when required to do so by law; or

(iii) the employer withholds taxes and the person provides proof he or she files taxes as self-employed.

(B)Records used and income calculation. The worker uses the records described in (i) through (iii) of this subparagraph to calculate income. When the person reports a loss instead of a profit on the business, the worker does not deduct the loss from other household income.

(i) When the person filed a federal income tax return for self-employment income for the most recent year, whether the person's income is derived from his or her own business or from working for an employer, the worker uses the gross self-employment income shown on the person's federal income tax return. The worker subtracts 50 percent of the income for claimed business expenses, and divides the income by 12 or, when the self-employment income was received for less than the full calendar year, by the number of months the business has existed or the number of months since the person started working for the employer. The worker verifies the person's start date with the employer when the person states he or she has not worked for the employer for at least 12 months.

(ii) When the person did not file an income tax return for the most recent tax year for his or her own business, the worker calculates self-employment income by using the person's business records for the last 12 months or the number of months the business has existed when less than 12 months. When the client declares business expenses, the worker subtracts 50 percent of the gross self-employment income to arrive at the net profit.

(iii) When the person works for an employer, did not file a federal tax return as self-employed, and receives earnings from an employer, the person must provide proof of the last 12 months of income from the employer. The worker divides the gross income by 12 or the number of months the person worked for the employer to determine monthly income. When the person declares business expenses, the worker subtracts 50 percent of the gross self-employment income before dividing the income by the applicable number of months to determine monthly income.

(C)Profit sharing. Households who operate S corporations, general or limited partnerships, or limited liability companies (LLC) may receive profit sharing that is reported on the household's personal income tax return.

(i) S corporation profit sharing is considered unearned profit-sharing income. Refer to OAC 340:40-7-11(b)(2) and (c)(11) for information regarding S corporations.

(ii) Partnerships are unincorporated businesses with two or more partners. When a household member is a partner in a business, he or she is considered self-employed and not one of the business's employees. Each partner receives a profit share from the business. When a business is considered a:

(I) general partnership or LLC with a member-manager, each partner's share of the business income is shown as self-employment income on his or her federal income tax form; or

(II) limited partnership or other LLC member, each partner's share of the business income is shown as self-employment income or unearned profit-sharing income on his or her federal income tax form.

(D)Monthly self-employment income. Self-employment income received on a monthly basis is normally averaged over a 12-month period. When the averaged amount does not accurately reflect the household's actual monthly circumstances because the household experienced a substantial increase or decrease in income, the worker calculates the self-employment income based on anticipated earnings.

(E)Seasonal self-employment. Self-employment income intended to meet the household's needs for only part of the year is averaged over the time period it is intended to cover.

(F)Annualized self-employment income. Self-employment income that represents a household's annual support is averaged and annualized over a 12-month period, even when the income is received in a short time period.

(i) When the average annualized amount does not accurately reflect the person's actual monthly circumstances because the person experienced a substantial increase or decrease in income, the worker calculates the self-employment income on anticipated earnings.

(ii) The worker does not calculate self-employment income on the basis of prior earnings, such as income tax returns, when an increase or decrease of business has occurred.

(iii) When the person received the self-employment income for less than 12 months, the worker averages the income over the applicable number of months and projects the monthly amount for the coming year.

(G)Rental property income. Rental property is considered self-employment income.

(H)Room and board income. Payments from roomers or boarders are considered self-employment when the roomer or boarder pays a reasonable amount.

(4)On-the-job training (OJT). OJT income from regular employment is considered earned income. This includes OJT provided, per Section 3(44) of the Workforce Innovation and Opportunity Act (WIOA), for persons 19 years of age and older. This does not include classroom or institutional training or WIOA-sponsored intern assignments, even when an hourly amount is paid for such training, per OAC 340:40-7-12(25)(G).

(5) Title I payments of Domestic Volunteer Services Act (DVSA). Payments under Title I of the DVSA of 1973 as amended, per Public Law 93-113, are considered earned income unless excluded, per OAC 340:40-7-12.

(6)Children's earnings. A minor parent's earned income is treated as adult earned income. Earnings of other children 17 years of age and younger who are under an adult household member's parental control are excluded, per OAC 340:40-7-12.

(7)Sale of whole blood or plasma. The sale of whole blood or blood plasma is considered as earned income.

(8)Training allowances. Training allowances from vocational or rehabilitative programs recognized by federal, state, or local governments, such as the work incentive program, are considered as earned income to the extent they are not a reimbursement. Training allowances received under WIOA are excluded.

(c)Unearned income. Unearned income is income a person receives for which the person does not put forth any daily, physical labor. Types of income listed in (1) through (11) of this subsection are considered unearned income.

(1)Assistance payments. Assistance payments include state means-tested programs, such as Temporary Assistance for Needy Families (TANF), including Supported Permanency benefits, State Supplemental Payment (SSP) to the aged, blind, or disabled, and Refugee Resettlement Program (RRP) cash assistance.

(2)Pensions, disability, and Social Security benefits. Annuities, pensions, retirement benefits, disability benefits from either government or private sources, or Social Security survivor benefits are considered unearned income.

(A) When a minor child receiving Social Security benefits no longer lives with the payee receiving the Social Security benefits, only the portion of the child's Social Security benefit used to meet the minor child's needs is considered income. This may include cash given directly to the minor child or money paid to a third party for the minor child's room and board.

(B) The parent or caretaker or, when appropriate, the minor child must take action to become the payee within the 12-month eligibility period, per OAC 340:40-7-9(d). When the parent, caretaker, or minor child does not take action by renewal, the worker counts the total Social Security benefit as income.

(3)Supplemental Security Income (SSI). SSI is considered unearned income.

(4)Unemployment and workers' compensation. Income from unemployment insurance benefits or workers' compensation is counted as unearned income.

(5)Child support, court-ordered or third party paid child care, and alimony. Child support, child care payments, and alimony payments, whether court-ordered or voluntary, made directly to the household from non-household members are counted as unearned income.

(A) Child care payments paid directly to the child care provider are not considered countable child support income.

(B) When the non-custodial parent reports he or she pays a portion of the client's family share copayment to the child care provider, it is not considered countable child support income.

(C) When the non-custodial parent or another third party, such as an employer, makes a payment to the child care provider in addition to the client's copayment, it is considered an additional copayment. Oklahoma Human Services (OKDHS) subtracts the additional copayment from the subsidy payment OKDHS owes to the child care provider.

(D) Any other payment made to a third party for a household expense is considered as countable child support income when a court order directs the payment be made to the household. Payments for medical support are excluded.

(6)Veterans' compensation, pensions, or military allotments. Disability compensation, military allotments, servicemen dependent allowances, and similar payments are considered unearned income.

(7)Contributions. Appreciable cash contributions recurrently received are considered unearned income except when the contribution is not made directly to the client. To be appreciable, a contribution must exceed $30 per calendar quarter per person.

(8)Dividends, interest, minerals, and royalties. Dividends, interest income, income from minerals, royalties, and similar sources are considered unearned income. When income from these sources is received irregularly or in varied amounts, it is averaged over 12 months. Income from royalties is treated as unearned, self-employment income, subject to (b)(2) of this Section.

(9)Lump sum payments. Recurring lump sum payments, including income from earnings, are averaged over the period they are intended to cover.

(10)Irregular income. Income received irregularly that exceeds $30 per calendar quarter is considered income unless it is from an excluded income source specifically mentioned at OAC 340:40-7-12. Countable irregular income is averaged over 12 months.

(11)Profit sharing. When a household member is a shareholder in an S corporation or a partner in a limited partnership or an LLC, he or she may receive a distribution or profit share of the business. This is considered as unearned income.

Okla. Admin. Code § 340:40-7-11

Added at 17 Ok Reg 25, eff 10-1-99 (emergency); Added at 17 Ok Reg 1244, eff 6-1-00 ; Amended at 17 Ok Reg 3583, eff 10-1-00 (emergency) ; Amended at 18 Ok Reg 1236, eff 5-11-01 ; Amended at 19 Ok Reg 1757, eff 6-14-02 ; Amended at 20 Ok Reg 530, eff 1-1-03 (emergency); Amended at 20 Ok Reg 2048, eff 7-1-03 ; Amended at 20 Ok Reg 2800, eff 8-1-03 (emergency); Amended at 20 Ok Reg 2916, eff 8-1-03 (emergency); Amended at 21 Ok Reg 1377, eff 7-1-04 ; Amended at 21 Ok Reg 1364, eff 9-1-04 ; Amended at 23 Ok Reg 1872, eff 7-1-06 ; Amended at 24 Ok Reg 2184, eff 7-1-07 ; Amended at 27 Ok Reg 21, eff 10-1-09 (emergency); Amended at 27 Ok Reg 1220, eff 6-1-10 ; Amended at 28 Ok Reg 831, eff 6-1-11 ; Amended at 29 Ok Reg 787, eff 7-1-12 ; Amended at 30 Ok Reg 1352, eff 7-1-13

Amended by Oklahoma Register, Volume 32, Issue 24, September 1, 2015, eff. 10/1/2015

Amended by Oklahoma Register, Volume 34, Issue 24, September 1, 2017, eff. 10/1/2017

Amended by Oklahoma Register, Volume 37, Issue 24, September 1, 2020, eff. 9/15/2020

Amended by Oklahoma Register, Volume 38, Issue 24, September 1, 2021, eff. 9/15/2021

Amended by Oklahoma Register, Volume 39, Issue 24, September 1, 2022, eff. 9/15/2022