760-2          WORK INCENTIVE DEDUCTIONS

Individuals who are working may be eligible to receive work incentive deductions.  There are two types of work incentive deductions that may be subtracted from an individual’s earnings:

• Earned income deductions; and 

• Child or dependent care deductions.

The earned income deductions disregard a portion of gross earnings.  Child or dependent care expenses may then be deducted from the remaining earned income, within certain limits.

760-2 A.     WHO IS ENTITLED TO WORK INCENTIVE DEDUCTIONS

To receive work incentive deductions an individual must be working and receiving earnings, including in-kind earned income, from a job or self-employment and fit one of the categories listed below:

• Included in the TATemporary Assistance unit 

• Required to be included in the filing unit, but are not because they failed an eligibility requirement (such as enumeration or qualified alien status); or 

• Required to be included in the filing unit, but refuse the ATAPAlaska Temporary Assistance Program grant.

The work incentive deductions are not allowed when an individual, without good cause:

• Voluntarily terminates or quits a job; 

• Refuses to accept additional hours of work, not to exceed 40 hours per week; 

• Voluntarily reduces gross monthly earnings or hours of employment; or 

• Fails to timely report starting or stopping a job, a change in rate of pay, or a change in employment status from part-time to full-time or full-time to part-time.

760-2 B.     AMOUNTS AND LIMITS OF WORK INCENTIVE DEDUCTIONS

1. $90 Work Expense Deduction

The $90 work expense deduction is allowed when:

• Deeming the income of a stepparent, ineligible alien parent, or parent of minor parent, and 

• Determining the net income eligibility of applicants and new assistance unit members who have not received ATAPAlaska Temporary Assistance Program benefits in one of the previous four months.

2. Earned Income Deduction

The following deductions are allowed when determining:

• Net income eligibility for individuals who have received assistance in at least one of the previous four months, and  

• payment amounts 
  

3. Child and Incapacitated Parent Care Deductions

Child or incapacitated parent care costs are allowed as a deduction within certain limits.  An ”incapacitated” parent is one who has been determined to be physically or mentally unable to perform gainful activity.

Monthly Maximums

The anticipated cost of care, up to the following maximums, may be deducted for each child or dependent.

• $200 per month for each child under age 2; 

• $175 per month for each child age 2 or older, or incapacitated parent.

The lower standard ($175) is applied beginning with the benefit month following a child’s second birthday

760-2 C.     HOW WORK INCENTIVE DEDUCTIONS ARE APPLIED TO INCOME

1. Earned Income Deductions

Work incentive deductions are applied to earned income, including in-kind earned income and self-employment income.  For self-employed individuals, the deductions are allowed against net self-employment income only in the months the self-employed person actually works.

The earned income deduction is not applied:

• When the household has no earnings; 

• In determining whether a family meets the 185% gross income test: 

• During the income eligibility test if an applicant or new assistance unit member has not received ATAPAlaska Temporary Assistance Program benefits in any one of the preceding four months; or 

• When deeming the income of a stepparent, sponsor  of an alien, or parent of a minor parent.

Note:  

Stepparents, sponsors of alien, and parents of minor parents whose income is deemed available to the assistance unit receive certain other work expense deductions (see ATAPAlaska Temporary Assistance Program MSManual Section 756-5).

Each month the earned income deduction is applied to an individual's earnings, it counts as a month of use.  These months are tracked to ensure that the correct percentage of remaining earned income is deducted (see chart in ATAPAlaska Temporary Assistance Program MSManual Section 760-2 B).

A month of earnings is counted when:

• The assistance unit is eligible, but refuses to accept the TATemporary Assistance payment; 

• The family does not receive a payment because of the $10 payment limitation; 

• The earned income deduction is denied because an individual, without good cause, reduced, terminated or refused employment, or failed to timely report starting or stopping a job, a change in rate of pay, or a change in employment status from part-time to full-time or full-time to part-time; or 

• A penalty or disqualification is imposed against the individual who receives earned income.

A month of use is not counted during:

• A month is which no earnings are received; 

• A month of suspension; or 

• A month in which the family is not eligible for assistance.

2. Child or Incapacitated Parent Care Deductions

These deductions are taken from an individual's earned income after applying the earned income deduction.  The anticipated child or dependent care expenses the recipient will incur are deducted from earned income if:

• The client reports and verifies the expense; 

• The charges are for child or adult care during hours of work or assigned work activities, plus reasonable direct commuting time between the care provider and the place of employment or work activity; 

• The persons being cared for are members of the assistance unit; and 

• The care provider is not a member of the TATemporary Assistance or economic unit.

If a provider charges a flat rate for the care of more than one person, divide the total amount paid by the number of persons receiving the care.  The result is the amount to be allocated to each dependent for whom the cost is allowed.

760-2 D.     DENIAL OF WORK INCENTIVE DEDUCTIONS

If an individual is exempt from work activities, do not apply the denial of work incentive deductions for a job quit, job refusal, or voluntary reduction of income.  However, individuals who do not timely report starting or stopping a job, a change in rate of pay, or a change in employment status from part-time to full-time or full-time to part-time are subject to this denial whether they are exempt from work activities or not.

1. Causes for Denial

Earned income and dependent care deductions are denied when an individual, without good cause:

1. Voluntarily terminates or quits a job; 

2. Refuses to accept a bona-fide offer of employment; 

3. Voluntarily accepts a substantially reduced amount of gross monthly earnings; or 

4. Untimely reports starting or stopping a job, a change in rate of pay, or a change in employment status from part-time to full-time or full-time to part-time.  A report is untimely if it is not received within 10 days of the change.

2. Application of Work Incentive Deduction Denials

A job quit, voluntary reduction in hours, or refusal of employment must be verified before the denial may be applied.

Work incentive deductions are denied in both the income eligibility determination test and the payment calculations.

• Apply denials for voluntary terminations, reductions, and job refusals to the benefit month following the month of termination, reduction, or refusal. 

• Apply denials due to untimely reporting of changes in employment status to the payment month affected by the unreported change.

In practice, most denials of work incentive deductions will be computed "after the fact" and a claim determination completed if an overpayment has occurred.

3. Good Cause

When an individual terminates or quits employment, refuses to accept employment, voluntarily reduces hours of employment or gross monthly earnings, or does not timely report changes in employment status, the caseworker must determine whether the individual has good cause before denying the deductions.  If good cause exists, the work incentive deductions are allowed.  

a. Good Cause Reasons For Termination, Refusal, Reduction:

Allowable good cause reasons for job termination, job refusal, or voluntary reduction are the same as the good cause reasons listed in the ATAPAlaska Temporary Assistance Program MSManual Section 722-4 and 723-1 C.

b. Good Cause Reasons for Untimely Reporting of Changes in Employment Status

Good cause for failure to report exists only when an individual cannot fulfill the reporting requirements due to circumstances beyond his or her control.  Examples of good cause include:

• Physical or psychological illness or incapacity severe enough and long enough to prevent reporting: 

• Illiteracy; 

• Mail delivery was untimely and this fact was documented; and 

• Other extenuating circumstances that prevented the client, through no fault of their own, from meeting the reporting requirement.