Disallowed Expenses

[63-503.254]

Paid by Some Types of Exempt Income

Expenses paid by the three types of exempt income listed below are not deductible:

• Reimbursement
• Vendor payment
• Income-in-Kind

Expenses paid by any other type of exempt income may be allowed as a deduction.

For example, the portion of rent covered by an exempt vendor payment cannot be counted as part of the household's shelter cost. However, that portion of an allowable medical expense that is not reimbursable shall be included as part of the household's medical expenses. Rent paid by exempt student income is allowable as a deduction.

Service Provided by an HH Member

Expenses are only deductible if the service is provided by someone outside the household and the household makes a payment for the service. For example, a dependent care deduction is not allowed if:

• Another household member or excluded member provides the care or
• Compensation for the care is provided as an in-kind benefit, such as food.

Repeat Bills

Amounts carried forward from a previous billing period are not allowable.

Federal Demo Project

An expense covered by an excluded vendor payment that has been converted to a direct cash payment under the approval of a federally authorized demonstration project.

Excluded and Nonhousehold Member Expenses

[Refer to “Excluded and Non-household Members,” page 10-1] for treatment of excluded member income and deductions.]

Expenses Exceed Income

 

A household’s report of expenses exceeding its income may be grounds for determining that further verification is required. Expenses deemed questionable are not allowed as deductions in the CalFresh budget unless the information is verified. However, these circumstances must not, in and of themselves, be grounds for denial or discontinuance. The eligibility worker must instead explore with the household how it manages its finances, whether the household receives excluded income or has resources, and how long the household has managed under these circumstances.

Reminder: Exempt income should not be verified unless it is questionable. 

 

The household must be given a chance to explain the discrepancy. The “Request for Verification (CW 2200) should be mailed to the client for clarification. If a documentary verification is unavailable, collateral contacts should be accepted to support explanations.

A deduction is allowed if the household reasonably explains how it meets its monthly expenses, which should be documented in the case record.

If the household can only meet its expenses for a limited time, the EW may determine that further verification of the client's statements, living situation, or household composition is needed.

If the household’s reported expenses are deemed questionable, and the household does not provide verification or explore how it manages its finances with the eligibility worker:

• Expenses must not be allowed, but the application may be approved if the household is otherwise eligible.
• Document the explanation provided by the client and the reason for disallowing expenses in the case record.

ExampleExample

Related Topics

Dependent Care

Shelter Costs

Standard Deduction