The U.S. Department of Housing and Urban Development (HUD) has released Notice H 2023-10, which expands upon the Final Rule for implementing the Housing Opportunity Through Modernization Act (HOTMA). This final rule provides clarification regarding how income is determined for purposes of HUD programs and other programs that must follow HUD rules relative to the determination of income.
Annual income includes all amounts received from all sources by each member of the family who is 18 years of age or older, the head of household, or spouse of the head of household, in addition to unearned income received by or on behalf of each dependent who is under 18 years of age. Annual income does not include amounts specifically excluded in 24 CFR §5.609.
HUD clarifies that annual income includes “all amounts received,” not the amount that a family may be legally entitled to receive but which they do not receive. For example, a family’s child support or alimony income must be based on payments received, not the amounts to which a family is entitled by court or agency orders. For this reason, a copy of a court order or other written payment agreement alone may not be sufficient verification of amounts received by a family.
Annual income also includes all actual anticipated income from assets even if the asset is excluded from net family assets but the income from the asset is not otherwise excluded. Imputed returns on net family assets are included in annual income only when net family assets exceed $50,000, and actual asset income cannot be calculated for all assets.
A day laborer is defined as an individual hired and paid one day at a time without an agreement that the individual will be hired or work again in the future.
Income earned as a day laborer is considered “earned” income and must be included in the determination of income unless specifically excluded by federal regulation (e.g., earnings of full-time students in excess of the dependent deduction).
An independent contractor is an individual who qualifies as an independent contractor instead of an employee in accordance with IRS regulations and whose earnings are subject to self-employment tax.
In general, an individual is an independent contractor if they have the right to control or direct only the conduct of the work. For example, while instructions and route information are generally provided, third-party delivery and transportation service providers are considered independent contractors unless state law dictates otherwise. In addition, “gig workers,” such as babysitters, landscapers, rideshare drivers, and house cleaners, typically fall into the category of independent contractors.
Income earned as an independent contractor is considered “earned” income and must be included in the determination of income unless specifically excluded by federal regulation (e.g., earnings of full-time students in excess of the dependent deduction).
A seasonal worker is defined as an individual who is: 1) hired into a short-term position (e.g., for which the customary employment period for the job is six months or less); and 2) the employment begins about the same time each year (such as summer or winter).
Examples of seasonal work include employment limited to holidays or agricultural seasons. Seasonal work may include but is not limited to employment as a lifeguard, ballpark vendor, or snowplow driver.
Income earned as a seasonal worker is considered “earned” income and must be included in the determination of income unless specifically excluded by federal regulation.
In conclusion, Notice H 2023-10 and the Final Rule for the Housing Opportunity Through Modernization Act provide essential guidelines for determining income within HUD programs. These clarifications serve to ensure a fair and accurate assessment of income, capturing the complexities of modern work arrangements from day laborers to independent contractors and seasonal workers. By including actual received income and anticipating earnings from assets, HUD aims to streamline the process, promote transparency, and provide consistency across the board. This approach not only supports the equitable distribution of housing assistance but also reflects the evolving nature of income in a gig economy. As HUD continues to refine its policies, these measures are a step toward modernizing housing opportunities and upholding the fundamental principle that everyone deserves access to affordable housing.