Maternity Leave Impacts Income Eligibility

March 31, 2009
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You have an applicant at your tax credit housing site with income from a job that is above the tax credit limits. However, she is several months pregnant and plans on taking maternity leave, although she has not set a date or informed her employer. If you deduct the income from her three months of maternity leave, she qualifies for the site. In this instance, should the property manager take the leave into account when determining her eligibility?

Although the property manager may be tempted to, he should not until he knows for certain when—and if—she is taking maternity leave. Until that time, her income has to be counted as though she were employed for the entire year.

The HUD Handbook 4350.3, which tax credit rules require property managers to follow, requires owners to “use current circumstances to project income, unless verification forms indicate that an imminent change will occur.” That means the property manager should annualize a household member’s annual income, even if the household member does not expect to earn the income for a full 12 months. For instance, if a household member expects that her employment benefits will end or, as in this case, that she will take a leave of absence from work, the manager should still determine her income by projecting it over the entire year.

However, most states would allow a manager to count her unborn child when determining family size and income limits, which might allow her to qualify for the site at her present income level. Managers should ask their state housing agency first, before counting unborn children as household members when determining eligibility.