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:
- $31,040 (Annual FPL for 5 people)
- divided by 12 months
- equals $2,587 (Monthly FPL for 5 people)
- divided by 2 (round up or down)
- equals $1,294 (1/2 of the monthly FPL for 5 people)
minus $776 (payment level)- equals $518(IED amount)
Ms. A passes the first test of eligibility as budgeted earned income of $282 ($800 earned income minus ($518 IED) is less than the payment level of $776.
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
- $40,120 (Annual FPL for 7 people)
- divided by 12 months
- equals $3,343
- divided by 2 (round up or down)
- equals $1,672
- minus $1,003 (TANF payment Level)
- equals $669 (IED amount)
- Calculation of Ms. Q's IED
- $40,120 (Annual FPL for 7 people)
- divided by 12 months
- equals $3,343
- divided by 2 (round up or down)
- equals $1,672
- minus $1,003 (TANF payment Level)
- equals $669 (IED amount)
Mr. R and Ms. Q do not pass the first test of eligibility. Mr. R's budgeted earned income of $1,731($2,400 earned income minus $669 IED), plus budget earned income for Ms. Q of $531($1,200 earned income minus $669 IED) is over the TANF payment level of $1,003. 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 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 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 $549 (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 $549
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. Ms. V reports she now earns $1,500 a month beginning December. 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:
- $1,500 Gross earned income
- minus $1,125 3/4 income deduction
- equals $375 Compared to the Payment Level of $549
Since $375 is less than the Payment Level of $549 Ms. V is eligible for cash benefits under TANF.
