KTAP Earned Income Deductions

1. KTAP Earned Income Deductions

2. Introduction If the gross income test is passed, deductions are allowed from the earned income of each individual, including sanctioned or penalized individuals, if appropriate. This presentation will help you to correctly apply KTAP earned income deductions.

3. No Deductions Allowed If: • The income is earned from illegal activities. • The individual requests discontinuance of the case in order to avoid using the time-limited deductions. • The individual failed to report earnings within 10 days, except when due to: benefit group was the victim of a natural disaster, an immediate family member living in the home was institutionalized or died, or the employed individual was out of town the entire reporting period. • Employment is refused, reduced, or terminated without good cause within prior 30 days. The good cause reasons on the following pages are found in Volume III, MS 2843

4. Good Cause Reasons • The offer of employment was NOT at a minimum wage customary for such work. • The individual is unable to engage in such employment or training for mental or physical health reasons. • The individual has no way to and from work, or the site is so far from the home that commuting time exceeds 3 hours daily. • Working conditions at job or training are a risk to the individual's health or safety. • The child care is terminated through no fault of the client.

5. More Good Cause Reasons • Available childcare does not meet special needs of the child. • The parent is temporarily absent from work on approved educational leave. • The parent is needed in the home to care for a household member who is ill or incapacitated, and there is no other household member available to provide the care. Only verify good cause if there is reason to doubt client's statement. A good cause determination is not required for an individual "fired" from a job. Document the case record whether good cause exists and why.

6. Earned Income Deductions • $90 work standard • $30 and 1/3 deduction • $30 deduction • Dependent care expense

7. $90 Work Standard • The work expense standard is deducted from the earnings of each individual, including sanctioned or penalized folks or technically excluded parents, if eligible to receive deductions. • Deduct up to $90 from full- or part-time employment, including for folks whose income is deemed through a test budget. • If the earnings are less than $90, the amount of the earnings is the amount deducted as the work expense standard.

8. Time-limited Deductions The $30 and 1/3 deduction is allowed for up to 4 months. The $30 deduction is given for 8 consecutive months. KAMES applies a spot check to ensure deductions are removed timely. These deductions are tracked on the PAFS-116, Supp. A. Time-limited deductions are NOT allowed for a technically excluded parent If the earnings report was untimely, without good cause, the $30 and 1/3 month count starts with the month the job began, but the deduction is NOT allowed for claim calculations.

9. $30 and 1/3 Deduction A $30 and 1/3 month is any month where $1 or more income remains after giving the work expense standard. If no income remains, the month is NOT a $30 & 1/3 month. This deduction is applied for each individual with earnings. This deduction starts over if the individual gains new employment or the case is correctly discontinued and re-approved. Once all 4 months are used, remove the deduction and do not allow again until the individual meets the above criteria.

10. $30 Deduction After the $30 and 1/3 deduction ends, the next 8 consecutive months are counted as $30 months, even if there is no longer earned income in the case. This deduction ends if the case is correctly discontinued, and the $30 and 1/3 deduction can start again if the family re-applies for KTAP. This deduction is allowed for each individual with earnings. After the 8 months have ended, remove the $30 deduction.

11. Dependent Care Deductions A dependent care deduction IS allowed in order to retain employment if: Dependent care is paid by the SR (this includes a sanctioned or penalized individual)who is a member of the KTAP assistance payment Paid for children or an incapacitated adult receiving care, living in the home, AND receiving KTAP The K-TAP case is not eligible for the Child Care Assistance Program (CCAP)

12. No Child Care Deduction A dependent care deduction is NOT allowed if: The child is 13 years old or older- unless the SR requests such care, provides a statement of why this care is necessary, and the worker concurs with the reason. Paid to a person living in the household, and that person is either: included in the KTAP grant, or a parent or stepparent of the child or incapacitated adult. (Allow the deduction if paid to someone in the home who is not listed above) The KTAP case is eligible for the Child Care Assistance Program (CCAP), even if a co-pay is charged.

13. Child Care Assistance Program How do you know if a family is eligible? • If the KTAP case would NOT be eligible without the childcare deduction, allow the deduction, and do NOT refer for CCAP at the option of the individual. • If the KTAP case IS eligible without allowing the childcare deduction, a referral is made for CCAP. • If a KTAP grant is less than $10, a referral for CCAP can be made.

14. Child Care Assistance Program • CCAP will not pay for the child care if the provider is living with the KTAP family, even if the family is eligible for CCAP. • CCAP must be used in lieu of a dependent care deduction, if the KTAP case remains eligible without the dependent care deduction. • Refer to Volume I, MS 1100 to 1125 for additional information concerning CCAP.

15. Who Gets the Deduction? • If both parents in a UP case are employed, a child care deduction may be given for only one parent's income. • If one parent is participating in Kentucky Works while the other parent is employed, allow childcare deduction from the employed parent's wages. • Use the SSN of the parent who is allowed the childcare deduction when entering it on KAMES.

16. Child Care Limits Individual 2 yrs old or older $150 for part-time $175 for full-time Individual under age 2 $200 for part-time $200 for full-time Part-time is defined as less than 30 hours per week, 130 hours per month, or not employed throughout the month. Full-time is defined as 30 hours or more per week or 130 hours or more per month. Enter the actual amount paid on KAMES, and the system will apply these child care limits for the deduction.

17. Verification Needed • The best estimate is derived by computing dependent care expenses for the same time period used in the computation of the best estimate of earnings. • If the childcare costs or provider is not anticipated to change, use the costs for the prior 2 months for wages, or 3 or 12 months for self-employment income. • Verify the actual amount the provider was paid. • If the costs in the prior months do not reflect ongoing costs due to a change, estimate the new costs based on the new provider's statement, and convert to a monthly amount.

18. Deduction Calculations Here is an example of how the deductions would be calculated: Gross Income: $520 (monthly income for this example) Work Standard:- 90 $430 $30 Deduction - 30 $400  3= 133 (this is the 1/3 deduction) 1/3 Deduction-133 $267 Child Care-200 (monthly expense for this example) $67 Countable income after deductions