Four Rules for Recertifying Household Member on Military Duty or Otherwise Absent
If you don’t know when to count—and when not to count—the income of absentees, because of military service or otherwise, during recertification at your mixed-income site, you can miscalculate residents’ rent and jeopardize the owner’ tax credits. Counting the income of an absentee when you shouldn’t might put the household over-income, causing you to apply the next available unit rule unnecessarily.
Military duty isn’t the only reason household members must sometimes be away from their low-income units, either temporarily or permanently. A household member may be confined to a hospital or nursing home, be sentenced to prison, or be required to relocate because of a job. When household members become permanently absent, they may no longer count as household members. If that’s the case, you mustn’t include their income when you recertify their households.
We’ve identified four rules to help you deal with absentees when recertifying households at your tax credit site. Following these rules will help you avoid making costly certification mistakes that could put the owner’ tax credits at risk.
Rule #1: Determine Whether Absence Is Temporary or Permanent
Determining whether you must consider a household member’ absence temporary or permanent isn’t always easy. The HUD Handbook doesn’t define these terms. But your state housing agency’ compliance manual might give you guidance. Then, make your best determination based on the information you have. As a rule, keep the following points in mind:
- A household member’ family may have discretion in the absentee’ continuation as a “family member.” The Handbook states, “An individual permanently confined to a nursing home or hospital may not be named as family head, spouse, or cohead but may continue as a family member at the family’s discretion.” The family has a choice about how the permanently confined individual’s income will be counted [HUD Handbook 4350.3, par. 5-6(D)].
- If the absent member has been confined for an indefinite amount of time and it could be many months or years until the absentee returns to the site, you should treat the absence as permanent. But in the case of a household member serving military duty for many months, you shouldn’t treat the absence as permanent.
- If you have trouble deciding whether a household member’ absence is temporary or permanent, talk with a tax credit consultant.
Rule #2: Count Income of Temporary Absentees
Generally, you must consider temporary absentees as household members. This means you must include their income as part of the household’ income [Handbook 4350.3, par. 5-6(B)(1)].
The HUD Handbook identifies an exception if a household member is temporarily absent because she’s away on active military duty. In this case, you must not consider her to be a household member and you must not count her income unless:
- She is the head, cohead, or spouse; or
- Her spouse or dependents are household members [Handbook 4350.3, par. 5-6(B)(3)].
However, if the spouse or dependent of the person on active military duty resides in the unit, then that person’s income must be counted in full even if the military member is not the head or spouse of the head of the family [HUD Handbook 4350.3, par. 5-6(B)(3)(a)]. For example, let’s say Joe and Mary’s son, Lieutenant George, is deployed, and George’s wife Susan resides with Joe and Mary. George’s income is therefore counted; however, George is not considered a household member.
Rule #3: Apply Same Income Rules to Temporary Absentees
If you count absentees as household members, treat their income the same as you would treat other members’ income. Follow all the income calculation rules in the HUD Handbook and apply them just as strictly to temporary absentees who count as household members. Make sure to verify their income following HUD’s rules.
You shouldn’t make an exception for temporary absentees’ income that won’t be available to the rest of the household. For instance, if a temporary absentee’s job earnings would normally count as income under the HUD Handbook, count the entire amount even though some or all these earnings won’t be available to the household [Handbook 4350.3, par. 5-4(A)(1)].
Example #1: Jane, who is a data entry clerk for a computer company under contract with the Army, has occupied a low-income unit at your tax credit site in Florida. The company transfers her for the summer to its corporate headquarters, elsewhere in Florida. She needs a portion of her income to cover her living expenses there. You must include the full amount of Jane’ income from her job in the household’ income, even though part of Jane’ income won’t be available to the entire household.
Example #2: After John suffered a war-related injury, he returned to his unit and got a job at a factory. Treatment for his injury, however, requires periodic stays at a rehab center every few months. When he’s confined to the rehab center, he gets disability payments equaling 80 percent of his income. When John is not living in his household’s unit, you must continue counting him as a household member. And you must count all of his income, including his disability income, even though he receives it when he’s not living in the unit.
Rule #4: Let Household Decide if Permanent Absentee Is Household Member
For family members who are permanently confined to a nursing home, the household decides whether you are to continue counting that person as a household member. And if the household chooses to count that person as a member, you must do so. But you must not count a permanently absent household member as the head, cohead, or spouse.