WAG 08-01-02-b: Initial Employment Deduction (New Request for TANF Cash)

PM 08-01-02-b

See WAG 25-03-02 (1) chart titled Initial Employment Deduction for amounts.

See WAG 25-06-18 for historical data on the Initial Employment Deduction.

Examples of calculating the IED

The following are examples of how the IED is calculated on new request for TANF cash.

Example 1: Ms. A applies for TANF cash for herself and her four children.  She has earned income of $800 per month.  The IED is calculated as follows: 

  • Revised Manual Material$31,040 (Annual FPL for 5 people) 
  • divided by 12 months
  • equalsRevised manual material $2,587 (Monthly FPL for 5 people)
  • divided by 2 (round up or down)
  • equals Revised manual material$1,294 (1/2 of the monthly FPL for 5 people)
  • minus $767 (payment level)
  • Revised Manual Materialequals $527(IED amount)

Ms. A passes the first test of eligibility as budgeted earned income of Revised Manual Material$273 ($800 earned income minus Revised Manual Material($527 IED) is less than the payment level of $767.

Example 2: Mr. R and Ms. Q apply for TANF for themselves and their five common children. Mr. R has earned income of $2,400 per month.  Ms. Q has earned income of $1,200 per month.  The IED is calculated as follows: 

  • Calculation of Mr. R's IED
    • Revised Manual Material$40,120 (Annual FPL for 7 people)
    • divided by 12 months 
    • Revised Manual Materialequals $3,343
    • divided by 2 (round up or down)
    • Revised Manual Materialequals $1,672
    • minus $991 (TANF payment Level)
    • equals $681 (IED amount)
  • Calculation of Ms. Q's IED
    • updated manual text$40,120 (Annual FPL for 7 people)
    • divided by 12 months 
    • updated manual textequals $3,343
    • divided by 2 (round up or down)
    • updated manual textequals $1,672
    • minus $991 (TANF payment Level)
    • new manual materialequals $681 (IED amount)

Mr. R and Ms. Q do not pass the first test of eligibility.  Mr. R's budgeted earned income of new manual material$1,719($2,400 earned income minus new manual material$681 IED), plus budget earned income for Ms. Q of new manual material$539 ($1,200 earned income minus new manual material$681 IED) is over the TANF payment level of $991. The case will be reviewed automatically by IES for medical coverage.

Special budgeting situations:

To determine family size for Parent Liability, see PM 10-04-04. To determine family size for an ineligible parent or excluded spouse, see Diverted Income WAG 10-04-02

Example 1: Parent Liability - Tonya is an unmarried 16- year- old applying for TANF for herself and her child. She lives deleted manual material with her employed parents, Bob and Sue, and her 2 younger brothers.

The parents' family unit size is 4, including Bob and Sue and their 2 dependent sons. Do not include Tonya and her child. Use the IED for a family unit size of 4. 

Example 2: Ineligible  Parent - Mrs. A Deleted manual material applies for TANF for herself and 2 children. Mr. A is ineligible for TANF due to his immigration status, but since he is employed, his income must be used to determine financial eligibility for Mrs. A and their 2 children. Mr. A has a young son living with the family who also is an ineligible noncitizen.

The family unit size is 2, including Mr. A and his dependent ineligible son. Use the IED for a family unit size of 2. 

Example 3: Excluded Spouse - Mrs. B applies for TANF for herself and her 4 children. Mr. B is not the father of any of the children. He is employed and is not applying for TANF as an optional person. Mr. B brought his own 2 young children to the marriage.

The family unit size is 3, including Mr. B and his 2 dependent children. Use the IED for a family unit size of 3.

Treatment of earned income when a former client stops receiving child support

Example: Ms. V receives TANF for herself and her three children. The TANF Payment Level for Ms. V is new manual text$543 (one adult and 2 children). Ms. V reports employment earning $2,000 each month. Child support in the amount of $250 is also being paid to the Division of Child Support Services. After allowing the $200 Pass Through, $50 child support is used to compare to the cash benefit the client receives.

  • The TANF calculation is as follows:
    • $2,000  Gross earned income
    • minus $1,500 3/4 income deduction
    • equals $500 earned income is budgeted
    • plus $50 Child Support ($250-$200 Pass Through)
    • equals $550 Compared to the Payment Level of new manual text$543

The combination of budgeted earned income ($500) and child support ($50) makes the case ineligible for cash benefits. The cash assistance is stopped effective October.

In December, the child support stops and Ms. V requests cash assistance.  Do not apply the first eligibility test using the IED. Apply the 2nd eligibility test. Ms. V is eligible for cash.

  • The calculation is as follows:
    • $2,000 Gross earned income
    • minus $1,500 3/4 income deduction
    • equals $500 Compared to the Payment Level of new manual text$543

Since $500 is less than the Payment Level of new manual text$543 Ms. V is eligible for cash benefits under TANF.