Shelter Shelter DeductionsDeductions

Volume II, MS 5470

Shelter Expenses Are:Shelter Expenses Are:• Expenses incurred to Expenses incurred to occupyoccupy a given a given

shelter or leading to ownership of shelter or leading to ownership of sheltershelter , including: mortgage, rent, , including: mortgage, rent, property taxes and insurance, etc. property taxes and insurance, etc.

• Expenses for Expenses for utilitiesutilities at the residence, at the residence, such as: heating, cooling, water, and such as: heating, cooling, water, and telephone, etc. telephone, etc.

LimitationsLimitations

Remember that the Shelter Deduction is limited to only shelter costs that are in excess of 50% of the household's income after all other deductions are applied.

There’s an example of this on the next slide...

ExampleNet Income (after deductions):$1250.00

Shelter Expenses: $895.00Half (50%) of Net income: - $625.00Excess Shelter Costs: $270.00

Since the excess is less than the Shelter Maximum, the deduction will be $270.00.

Shelter MaximumShelter MaximumAfter excess shelter costs are calculated, After excess shelter costs are calculated, KAMES will KAMES will notnot allow a deduction which allow a deduction which exceeds the Maximum.exceeds the Maximum.

Exception:Exception:– The shelter maximum does The shelter maximum does notnot apply to apply to

households with households with elderlyelderly or or disableddisabled members.members.

– So, be sure to answer questions regarding age So, be sure to answer questions regarding age and disability correctly on KAMES!and disability correctly on KAMES!

Allowable Shelter Allowable Shelter DeductionsDeductions

Allow shelter expenses Allow shelter expenses as billed or as billed or otherwise become dueotherwise become due. .

When do we request Verification?When do we request Verification?– At application and recertificationAt application and recertification– Interim change if a shelter increase Interim change if a shelter increase

would increase the benefit would increase the benefit allotment.allotment.

Rent ExpenseRent Expense

• Request information from the landlord or documentation, such as a current lease, to verify the current monthly rent expense.

• Do not include past due amounts as part of the ongoing rent deduction.

The next slide The next slide shows KAMES shows KAMES system entry for system entry for Rent...Rent...

Rent Expense on KAMESEnter the client stated amount of rent, and the time period it covers. (Usually monthly)

Enter “R” for rent in the “Type” field.

Enter the verified amount of rent, and the verification source code.If verification is not available at the time of application, leave both of these fields blank.

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Mortgage ExpensesMortgage ExpensesRequest documentation from the lender listing costs included in the mortgage payment.– Do not consider credit life as part of the

mortgage deduction.– Do not include amounts paid to an

escrow account, because taxes and insurance are listed separately on KAMES.

Mortgage Payment Example

Mortgage costs include:– Principle and Interest: $450.00– Payment to Escrow: $175.00– Credit Life Insurance: + $25.00– Total Payment: $650.00

Subtract the Credit Life and the Escrow payment, before entering on KAMES.

Entry on KAMES:

$450.00

Property TaxesProperty TaxesAllow the actual property taxes, not the discounted or penalty amount.

Example: The base tax bill amount is $845.00, and this payment is due by 10/31.– If paid prior to 9/30, they only pay $805.00– If not paid by 10/31, they must pay $920.00

Entry on KAMES:

$845.00

Insurance Insurance • Allow the insurance on the shelter Allow the insurance on the shelter

structure itself and state and local structure itself and state and local taxes, assessments, and the 1.5% taxes, assessments, and the 1.5% surcharge mandated by the State of surcharge mandated by the State of Kentucky.Kentucky.

• Do Do notnot allow amounts paid for coverage allow amounts paid for coverage on furniture or personal property or on furniture or personal property or surcharges imposed by the surcharges imposed by the companycompany..

Insurance ExampleTotal Yearly Bill:$395.50– Coverage on Furniture: $90.00– Personal Property Coverage: $45.00– Company Billing Charge: - $12.00

Allowable Deduction: $248.50

The next slides show KAMES system entry for Mortgage, Taxes and Insurance...

Mortgage, Taxes and InsuranceEnter the client stated amount of mortgage, and the time period it covers. (Usually monthly)

Enter “M” for Mortgage in the “Type” field.

Enter the verified amount, and the verification source code.If verification is not available at the time of application, leave both of these fields blank.

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Mortgage, Taxes and InsuranceEnter the client stated amounts for taxes and insurance, and the time period they cover. (Usually yearly for these expenses)

Note: If more than 2 bills are received for either mortgage or tax and insurance, it may be necessary to combine expenses on this screen.If so, be sure to document comments on how you combined expenses.

Enter the verified amounts, and the verification source codes.If verification is not available at the time of application, leave both of these fields blank.

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Shelter Costs for Unoccupied Shelter Costs for Unoccupied HomeHome

Only allow these as a deduction IF Only allow these as a deduction IF the home is the home is temporarilytemporarily unoccupied unoccupied due to one of the following reasons:due to one of the following reasons:– EmploymentEmployment– Job training away from homeJob training away from home– Illness Illness – Abandonment caused by a natural Abandonment caused by a natural

disaster or casualty lossdisaster or casualty loss

Self-Employment Self-Employment ShelterShelter

Households running a self-employment Households running a self-employment enterprise from their home enterprise from their home have many have many options, depending on the options, depending on the situationsituation. .

The expenses may be considered as a The expenses may be considered as a business expense business expense oror a shelter a shelter deduction.deduction.

Go to Go to MS 5470, and review item E, which explains all of the options...

Repairs to the HomeRepairs to the Home

Allow these expenses when the home was substantially damaged or destroyed due to a natural disaster, such as fire or flood, which have not or will not be reimbursed.

Utility ExpensesUtility Expenses

In addition to ongoing expenses, allow fees charged by the utility provider for initial installation or initial turn-on of the utility or the rental fee for a propane tank.

SUA: Standard Utility SUA: Standard Utility AllowanceAllowance

Households which incur out-of-pocket Households which incur out-of-pocket heating or air conditioning costs, heating or air conditioning costs, oror receive HEAP, receive HEAP, mustmust use the SUAuse the SUA. .

These households These households cannotcannot use their use their actual utility expenses.actual utility expenses.

The next slides The next slides show KAMES show KAMES system entry to system entry to use the SUA...use the SUA...

Answer “Y” to “Are you billed for any of the following utilities?”

Do NOT enter any actual amounts.Skip these fields!

“N” to “Are you billed for a telephone expense?” “Y” to “Are you billed for primary heating/air…?” “N” to “Is household receiving or been approved for HEAP…?” “Y” to “Is this household entitled to take the SUA?” Enter “WS”, “OR” or “RE” for verification source code: “N” for “Is this household entitled to take the BUA?”

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SUA Due to Heating/Cooling

Answer “Y” to “Are you billed for any of the following utilities?”

Do NOT enter any actual amounts.Skip these fields!

“N” to “Are you billed for a telephone expense?” “Y” or “N” to “Are you billed for primary heating/air…?” “Y” to “Is household receiving or been approved for HEAP…?” “Y” to “Is this household entitled to take the SUA?” Enter “OR” for verification source code: (HEAP Master report) “N” for “Is this household entitled to take the BUA?”

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SUA Due to HEAP

BUA: Basic Utility BUA: Basic Utility AllowanceAllowance

Households which incur at least Households which incur at least twotwo utility expenses which are utility expenses which are notnot heating or heating or cooling costs, cooling costs, must use the BUAmust use the BUA. .

ExamplesExamples: Phone, Electricity, Water or : Phone, Electricity, Water or Sewage, Garbage or Trash, or Cooking Sewage, Garbage or Trash, or Cooking Fuel. Fuel.

The next slide The next slide shows KAMES shows KAMES system entry to system entry to use the BUA...use the BUA...

Answer “Y” to “Are you billed for any of the following utilities?”

Do NOT enter any actual amounts.Skip these fields!

“N” to “Are you billed for a telephone expense?” “N” to “Are you billed for primary heating/air…?” “N” to “Is household receiving or been approved for HEAP…?” “N” to “Is this household entitled to take the SUA?” “Y” for “Is this household entitled to take the BUA?” Enter “WS”, “OR” or “RE” for “verification source code:”

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BUA on KAMES

Phone StandardPhone Standard

If the If the onlyonly utility expense incurred utility expense incurred by the household is a telephone bill, by the household is a telephone bill, use the Phone Standard deduction.use the Phone Standard deduction.

This deduction is a basic rate given This deduction is a basic rate given regardless of actual telephone regardless of actual telephone costs. costs.

The next slide The next slide shows KAMES shows KAMES system entry for system entry for the Phone the Phone Standard...Standard...

Answer “N” to “Are you billed for any of the following utilities?”

Do NOT enter any actual amounts.Skip these fields!

“Y” to “Are you billed for a telephone expense?” Enter “WS”, “OR” or “RE” for “verification source

code:” “N” to all remaining questions on this screen.

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Phone Standard on KAMES

Actual Utility ExpensesActual Utility Expenses

Only households who are Only households who are notnot entitled to entitled to use the SUA or BUA are allowed to use use the SUA or BUA are allowed to use the actual utility expense.the actual utility expense.

This would occur when the HH incurs This would occur when the HH incurs only only oneone expense, and it is expense, and it is notnot phonephone..

The next slide The next slide shows KAMES shows KAMES system entry for system entry for the Actual the Actual Utilities...Utilities...

Answer “Y” to “Are you billed for any of the following utilities?”

Enter actual amounts for utilities.

“N” to all remaining questions.

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Actual Utilities on KAMES

Enter verified amounts and verification source

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How do you know which utility deduction or allowance to use?

Please return to Blackboard, and review the tip sheet for “Utility Allowances”.You might want to print this document to help you apply this policy...

Take a Trip!Access your KAMES Eligibility Tables and locate the current amounts for the SUA, BUA, and the Phone Standard.

Write these amounts in the spaces provided in your Notes Pages...

Disallowable Shelter Disallowable Shelter CostsCosts

• Once again, take a trip to the Once again, take a trip to the Online Policy ManualOnline Policy Manual, and go to Volume , and go to Volume II.II.

• Locate the Manual Section that deals Locate the Manual Section that deals with “with “Disallowable Shelter CostsDisallowable Shelter Costs”, ”, and use it to fill in the blanks on your and use it to fill in the blanks on your Notes Pages.Notes Pages.

Are you ready to test your knowledge?

Please return to Blackboard, and complete the “SUA, BUA or Actual Expenses Activity”.