602-3 D. EXEMPT INCOME
1. Title IV Higher Education Act and Bureau of Indian Affairs Grants and Awards
The total amount of any grant, scholarship, or award issued under any program funded under the Title IV of the Higher Education Act or under a Bureau of Indian Affairs student assistance program is not counted as income in determining eligibility or benefit amount.
Payments that fit this category include:
Verify that the source of the education assistance is Title IV or BIA by viewing the individual’s award letter. Contact the awarding institution if the award letter is not available or is unclear.
2. Other Education Assistance
Education assistance that is not funded under Title IV of the Higher Education Act or the Bureau of Indian Affairs student assistance program funds is excluded as income if it is used or will be used for paying tuition, fees, or other necessary education expenses at any educational institution, including vocational, technical, and correspondence schools, and schools for people with disabilities.
Any portion of education assistance that is not used or set aside for paying tuition, fees, or other necessary education expenses is countable unearned income.
3. Work-Study Earned Income
College or university students may be enrolled in a work-study program in which they attend school part-time and work part-time at a job. Any income an applicant or recipient earns from employment in a work-study program will not be counted as income.
This disregard applies to both adults and children. The caseworker must verify that part-time employment of an applicant or recipient who claims to be in a work-study program is in fact a work-study job and not an individually acquired regular part-time job.
4. Loans
All bona fide loans, including educational, personal, and commercial loans, are disregarded as income. A bona fide loan is a debt that the borrower has an obligation to repay and expresses his or her intention to repay.
The bona fide nature of a loan must be verified and documented in the case file. Commercial and educational loans can normally be verified by seeing a copy of the written loan agreement or a document identifying the payment as a loan. In the case of personal loans, the verification must provide, at minimum, acknowledgment by the borrower and lender that an obligation to repay the loan exists, and acknowledgment by the borrower that he or she intends to repay the loan (with or without interest).
If it is determined the funds received are not from a bona fide loan, (there is no repayment obligation or the borrower has no intention of repayment) the amount received may or may not be countable income, depending on the source of the funds. All or some of the money may be exempt, such as a charitable contribution or excluded vendor payment, or counted as unearned income, such as a gift received directly from the source.
5. Exempt Vendor Payments
Money payments made on behalf of the household by non-household members to third parties are exempt income unless payment is a countable vendor payment as defined at MS 602-3B(6). A vendor payment is exempt when it is a gift, or when the household is not legally entitled to it, or when the household is not legally eligible for it.
Examples:
• TANF supportive service payments paid to a vendor.
• A court order specifies that a SNAP household member be paid $450 per month child support. The payment is made directly to the household member, and an extra $250 is sent to the landlord to cover part of the household member’s rent. The additional $250 represents a gift, and is an exempt vendor payment.
• A court order specifies $500 child support payment be paid to a SNAP household member and $800 be paid to the household's landlord to cover the rent. The $500 is countable unearned income. The $800 court-ordered vendor payment is excluded income because it represents in-kind income, shelter, not money. See MS 602-3D(6).
• A church pays the SNAP household’s rent. This is an exempt vendor payment because the payment is a gift.
6. In-Kind Income
Any gain or benefit that is not in the form of money is exempt income, such as shelter, produce from a garden, clothing, non-cash employee benefits such as the Legal Trust benefit provided to State of Alaska employees, and non-cash assistance such as the Medicare Part D Low-Income Subsidy.
7. Wages Held
Wages held by an employer without the employee's approval are exempt income, except for garnishments. See MS 602-3.
8. Irregular Income
See MS 603-1D for policy on budgeting irregular income.
9. Sporadic Income
Sporadic income, such as cash awards, gifts, prizes, and winnings (such as from bingo and dog mushing) is counted if the household has already received it in the month or can reasonably expect it to be received in the month. Income that cannot be reasonably anticipated is not included in the estimate of income. See MS 603-1D for policy on budgeting irregular income.
10. Charitable Contributions
Cash donations based on need, up to $300 per quarter, from private, nonprofit (as determined by the IRS) charitable organizations are exempt. For this provision, quarters are January-March, April-June, July-September, and October-December. Cash donations over $300 per quarter are not excluded. For example, a household receives $200 in May and $200 in June. The $200 May payment and $100 of the June payment is excluded; $100 is countable income in June.
11. Housing Assistance and Utility Assistance Payments
a. Heating or Energy Assistance
Payments or allowances made under any federal law for heating or energy assistance are exempt income. These include Heating Assistance Program payments from the State of Alaska Division of Public Assistance and Heating or Energy Assistance Program payments from a Native organization.
Note:
A utility expense covered by heating assistance is considered an out-of-pocket expense incurred by the household. Households receiving heating or energy assistance are entitled to the heating utility standard. See MS 602-4E(2).
b. Public Housing and Section 8 Housing Choice Voucher Subsidies
The U. S. Department of Housing and Urban Development (HUD), through Alaska Housing Finance Corporation (AHFC) or a Native or Regional Housing Authority, and Farmers Home Administration (FHA) make payments directly to a landlord for rent and/or utility costs. These payments are excluded vendor payments. The portion of the rent or utility bills paid by this payment is not allowed as a shelter expense.
However, when households that are in public housing or that receive Section 8 Housing Choice Voucher subsidies are responsible for paying utility costs, the AHFC or the Native or Regional Housing Authority may make a payment to the household. This payment is called a utility allowance or utility reimbursement and is excluded as income.
Households receiving a utility allowance are entitled to the appropriate heating or non-heating utility standard since the amount of the utility expense usually exceeds the amount of the utility allowance. See MS 602-4E(2).
c. Alaska Power Cost Equalization Program
Alaska Power Cost Equalization Program payments applied to the household’s electric bill are excluded vendor payments. These payments are not considered heating or energy assistance. The utility expense covered by the payment is not allowed as a shelter expense. See MS 602-4E(1)(b).
12. Alaska Native Claims Settlement Act Income
Alaska Native Claims Settlement Act (ANCSA) Alaska Native corporation payments to shareholders are exempt.
13. Non-recurring Lump Sum Payments
Non-recurring lump sum payments are exempt as income. Generally, lump sum payments are monies owed to the household such as rebates or credits. Other examples of non-recurring lump sum payments are one-time refugee resettlement payments, insurance settlements, or retroactive payments from Social Security or other agencies. Lump sum payments are counted as a resource in the month received. (See Administrative Procedures Manual section 128-4 for more information about refugee assistance.)
Exceptions:
Establishment specific gift cards are not treated as a resource in the month of receipt.
SSI retroactive lump-sum payments are excluded as income even when there are multiple payments.
14. Student Reimbursements or Allowances
Any payment made under Title IV of the Higher Education Act or under Bureau of Indian Affairs (BIA) student assistance programs is entirely excluded. Other educational income that is either used or intended to be used for allowable educational expenses is excluded. See MS 605-1B for policy on student eligibility and budgeting educational income.
15. Reimbursements
Reimbursements for past or future expenses, to the extent they do not exceed actual expenses and do not represent a gain or benefit to the household, are exempt. Reimbursements will not be considered to exceed actual expenses unless the provider or the household indicates the amount is excessive. Excluded reimbursements include:
Exception:
Reimbursements for normal household living expenses such as rent, personal clothing, and food eaten at home are considered a gain or benefit and are not excluded.
16. Monies Received for Care of Third Parties
Funds provided and used for the care of a third party beneficiary who is not a household member (third party payee) are exempt. For example, a household receives child support for a child not living in the home. The household sends the child support to the child. This child support is not income to the household. This also includes situations where separate households share rent and one household receives a rent payment from the other and pays the landlord. The household that pays the landlord would not have the money counted as income that was given to it by the other household to pay the rent. See MS 602-3B(4).
17. Earnings of Elementary and Secondary Students Under Age 18
Earned income of a student is exempt when an individual:
This income becomes countable effective the month following the month the student becomes 18 years of age or is no longer enrolled in elementary or secondary school and does not plan to resume enrollment, whichever occurs first.
Note:
To exempt earned income of an individual under the age of 18, who lives with their parents, or is under the parental control of an adult household member, requires verification of student status.
18. Volunteer Payments
Payments made under any program of the Corporation for National and Community Service (CNCS) are excluded income. This income may be identified under a number of program names, including, but not limited to, AmeriCorps, AmeriCorps-VISTA, AmeriCorps-NCCP (National Civilian Community Corps), National Senior Volunteer Corporation, Retired & Senior Volunteer Corps, Foster Grandparents Program, and Senior Companion Program.
Note:
If a VISTA member was receiving SNAP prior to enrolling in the VISTA program, payments received by the VISTA member are exempt income in determining eligibility for SNAP.
However, if a VISTA member was not receiving SNAP before entering into the VISTA program, VISTA payments are NOT exempt income and are counted as earned income when determining eligibility for SNAP.
19. Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970
The following payments are excluded as income under Title II: payments to persons displaced as a result of the acquisition of real property; relocation payments to a displaced homeowner toward the purchase of a replacement dwelling (such payment may only be to a displaced owner who purchases and occupies a dwelling within one year following displacement); replacement housing payments to a disabled person not eligible for a homeowner's payment.
20. Women, Infant, and Children Food Program
Payments or benefits received under the Women, Infant, and Children Program (WIC) are exempt.
21. Indian Settlement Payments
Payments to the Grand River Band of Ottawa Indians under P.L. 94-540, and P.L. 96-420, the Maine Indian Claims Settlement Act of 1980, and P.L. 95-433, Section 2, the Yakima, Apache Indians from the Indian Claims Commission are exempt.
22. Costs of Producing Self-employment Income
These costs are exempt. See MS 605-2D for computation of the cost of producing self-employment income.
23. Recoupment
Monies withheld from an assistance payment, earned income, or other income source, or monies received from any income source which are voluntarily or involuntarily returned, to repay a prior overpayment from that income source (provided that the overpayment is not otherwise excluded) are exempt.
Exception:
Recoupment of fraudulently obtained TANF or APA overpayments are not exempt. See MS 602-3B(1).
24. Workforce Innovation and Opportunity Act (WIOA) Payments
Earnings paid to persons participating in on-the-job training under a Workforce Innovation and Opportunity Act program are exempt when the person earning the money is under 19 years old. WIOA earnings paid to persons 19 years or older are countable earned income.
Reimbursements and other payments other than earnings paid to persons of any age under any WIOA program are exempt.
25. Mature Alaskans Seeking Skills Training Payments
Allowances, earnings and payments from an employer and funded by the Mature Alaskans Seeking Skills Training (MASST) are exempt income. The MASST program, federally known as the Senior Community Service Employment Program (SCSEP), is administered under Title V of the Older Americans Act, P.L. 100-175.
26. Earned Income Tax Credits (EITC)
Advance payments of earned income tax credits received from an employer are exempt income. A single tax credit payment received after the end of the tax year is exempt as a nonrecurring lump-sum payment per MS 602-2D(2). Retained EITC funds are excluded as a resource in certain cases. See MS 602-2B(26).
27. World War II Restitution Funds
Any restitution payments made by the U.S. Government to individual Japanese-Americans and to Aleuts (or, if deceased, payments made to their survivors) who were interned or relocated during World War II are excluded from income under Public Law 100-383. Qualifying Japanese-Americans are eligible for a $20,000 payment. Qualifying Aleut-Americans are eligible for a $12,000 payment.
Restitution payments paid to individual Japanese-Canadians who were interned or relocated during World War II by the Canadian Government are also excluded from income.
This income exclusion also applies to any funds received as a result of the investment or deposit of a restitution payment to eligible Aleuts.
However, any payments subsequently received from a trust established by the Secretary of the Interior and appropriated for Aleut residents are counted as income. The trustees may use the principal, accrued interest and other earnings for the benefit of the elderly, disabled, seriously ill, students in need of scholarships, the preservation of Aleut cultural heritage and historical records, the improvement of community centers in affected Aleut villages and other purposes to improve conditions of Aleut life.
28. Agent Orange Settlement Payments
Agent Orange settlement payments are excluded from income under Public Laws 101-201 and 101-239. Agent Orange settlement payments began in March 1989 and ended in 1994. Qualifying veterans received at least one payment a year for the life of the program. Qualifying survivors of deceased veterans received a single lump sum payment. VA disability payments for disease attributed to Agent Orange exposure are not exempt. These payments are treated the same as other VA disability payments.
This income exclusion also applies to any funds received as a result of the investment or deposit of Agent Orange settlement pay. See MS 602-3B(2).
29. PASS Child Care Payments
PASS I, II, and III Child Care payments paid to persons for their child care expenses are excluded income. These payments are countable earned income to the child care provider.
30. General Relief Assistance Payments
State of Alaska General Relief Assistance Program payments paid on behalf of the household to a vendor for household expenses such as rent, food, fuel, clothing, utilities, house repair, transportation, and burial are exempt.
Bureau of Indian Affairs (BIA) General Assistance Program burial payments made to a vendor are excluded as income.
See MS 602-3B(7) for policy on counting BIA General Assistance payments.
Note:
BIA General Assistance Program payments made to the household or to a vendor for the household are considered countable unearned income unless received after the month of intended use. Only BIA General Assistance Program burial payments made to a vendor are exempt.
31. Income Excluded by Federal Law
Income excluded by federal law is exempt. Refer to a partial listing of these income types at Addendum 5.
32. Plan For Achieving Self-Support (PASS) Income
Income of SSI recipients used for or deposited into a PASS account approved by the Social Security Administration is excluded.
33. Temporary Assistance for Needy Families Diversion Payments
Diversion payments made under a TANF program such as the Alaska Temporary Assistance Program or a Native Family Assistance Program are considered non-recurring lump sum payments and are excluded as income.
Note:
Household expenses paid with Diversion payments, such as shelter costs or dependent care, are allowable deductions.
34. Energy Employees Occupational Illness Compensation Payments
The Energy Employees Occupational Illness Compensation Act provides compensation to individuals who develop illnesses as a result of employment at certain federally owned facilities in which radioactive materials were used. These payments are exempt income.
35. Income Tax Returns
Federal income tax returns received after December 31, 2009 are excluded as income in the month of receipt and, if retained, as a resource for 12 months from receipt.
36. Victims of Crime Compensation Payments
Any payment received from a fund established by a State to aid victims of crime is excluded from income.
37. Cobell v. Salazar Settlement Payments
Settlement payments resulting from the Cobell v. Salazar class action suit are excluded from income.
38. Establishment Specific Gift Cards
Establishment specific gift cards are a credit that can only be used at that establishment. Such gift cards are treated as a non-recurring lump sum and excluded as income for determining SNAP eligibility or benefit levels.
Example:
Kylee received a Wally World gift card in the amount of $300.00 for her birthday. This gift card is treated as a non-recurring lump sum that is excluded from income.
39. Earned Income 2020 Census
Earned income from temporary employment in the 2020 Census is considered exempt income.
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