Effective Date: 09/01/03
Reference: 89 Ill. Adm. Code, Chapter IV, §50.235
Eligibility is determined on the basis of monthly gross income. To convert weekly income into monthly income, multiply weekly income by 4.333. To convert bi-weekly income into monthly income, multiply bi-weekly income by 2.1666. To convert twice monthly income into monthly income, multiply twice monthly income by 2.
- Monthly Income Calculation
Monthly income is determined on a prospective basis. The monthly income calculation must take into account all earned and unearned income included in the non-exempt income list.
- Collect the two most recent and consecutive pay stubs for each individual included in the family size 19 years of age and over. If the applicant has not been employed long enough to receive two consecutive pay stubs, refer to 01.03.02 for other acceptable income documentation.
- Add the gross wages from the two most recent and consecutive pay stubs submitted. Divide the result by 2.
- Determine if the individual is paid weekly, bi-weekly, semi-monthly, or monthly.
- Convert the result in 'B' above to monthly income.
- To convert weekly income into monthly income, multiply the result by 4.333.
- To convert bi-weekly income into monthly income, multiply the result by 2.1666.
- To convert semi-monthly income into monthly income, multiply the result by 2.
- Add other monthly unearned income to the monthly earned income calculated in 'D' above. This amount is the total gross monthly income.
- Deduct from the total gross monthly income from 'E', any child support paid out of the family's monthly income. This is the family's total net monthly income.
- If applicable, add the annual bonus or once a year overtime from II.B. here. The result is the family's prospective monthly income.
- Overtime/Bonus Calculation
Overtime pay must be included in the income calculation. Consider the "Year To Date" earnings on the pay stubs to determine whether the overtime is earned on a regular basis, sporadically, seasonally, or once a year.
- Regular Overtime
If overtime is received on a regular basis, include the overtime in the monthly income calculation.
- Overtime earned once a year/Annual Bonus
If an annual bonus or overtime pay is received as a one-time payment, do not include the annual bonus or the overtime in the monthly income calculation in procedure I, steps A-D. Instead, divide the one time payment/bonus by 12 and add the result to the family's total net monthly income after step F.
Example for Step G above: Client earns $200 in overtime during the holidays in December and receives a one-time payment. This is supported by the year-to-date earnings on the client's pay stubs. Divide the $200 by 12 ($200.00 ÷ 12 = $16.67). Add the result ($16.67) to the total net monthly income.
- Sporadic or Seasonal Overtime
If overtime is received on a sporadic or seasonal basis, consider the "Year To Date" amount when determining the overtime calculation.
Additionally, a client can document the end of seasonal overtime with the two most recent and consecutive pay stubs.
Example: In June, the two most recent and consecutive pay stubs indicate the client has earned $1,000 in overtime to date. The client is paid weekly and has received 26 checks. The client earns an average of $38.46 per week in overtime. ($1,000 ÷ 26 = $38.46) This result must be included in step I.D.
- Self-Employment Income Calculation
Eligibility for a self-employed client is based on net income. Net income is obtained from the Federal Income Tax Return (IRS1040) and all applicable schedules and attachments. Personal and business tax returns must be submitted.
Refer to 01.03.02 for other acceptable documentation if the client has not been self-employed long enough to have filed taxes.
- Subtract from gross self-employment income any allowable business expense necessary and directly related to producing goods or services.
Allowable self-employment expenses include, but are not limited to:
- Replacement of stock,
- Purchasing inventory,
- Space rental,
- Salaries for employees other than the client,
- Transportation expenses required for employment, and
- Interest on loans for capital assets or durable goods.
Income reinvested in a business, except for the purchase of real estate, is an allowable business expense. This includes the purchase of capital equipment, payment on the principal of loans, and other expenses needed to produce goods and services.
NOTE: Capital equipment is equipment needed to produce self-employment goods (e.g. a printing press, copy machines, farm machinery, tools, sewing machines, tractors, tow trucks, etc.).
Do not allow the following items as self-employment business expenses:
- Obsolescence and/or similar losses in the operation of the business,
- Personal business costs,
- Meals, and
- Personal transportation.
- Review the self-employment documentation submitted for expenses that are not allowed. If these expenses are included on the federal income tax return and are shown as deductions, the ineligible amounts must be added to the income.
- Figure monthly income by dividing annual self-employment income by 12.
- If the expenses exceed the gross receipts, the self-employment income will be zero (-0-). Those additional expenses which exceed the gross receipts will not be subtracted from other earned income in the household.