Earned Income

Earned income includes:

  • Wages,
  • Net earnings from self-employment,
  • Wages for work performed in a sheltered workshop,
  • In-kind earned income, and
  • Royalties.

Treatment of Earned Income

Wages

Wages are counted for each month when they are received.

Self-Employment Income

The monthly average of the annual net self-employment income is counted for each month of the taxable year. Information may be obtained by viewing the CAPI applicant’s or recipient’s most recent income tax forms.

Earned Income Exclusions/Deductions

Earned income exclusions are applied to earned income (gross wages or average net self-employment income) in the following order:

  1. Earned income excluded by other Federal law;
  2. Earned income tax credit;
  3. Up to $400/month, but not more than $1,620/year, for blind or disabled children regularly attending school;
  4. Any portion of the $20/month general exclusion not applied against unearned income. Refer to Income Exclusions and Unearned Income Exclusions;
  5. Earned income of $65/month;
  6. One-half of the remaining earned income in a month;
  7. Earned income used to pay IRWE for disabled (but not blind) individuals under age 65;
  8. BWE for blind individuals under age 65; and
  9. Earned income used to fulfill an approved PASS for blind and disabled individuals under age 65.

Impairment-Related Work Expenses (IRWE)

IRWE are expenses for items or services directly related to enabling a disabled person under age 65 to work, and which are necessarily incurred because of a physical or mental impairment.

To qualify:

  • An individual must receive a disability payment before age 65,
  • The expense must be reasonable, and
  • The expense must actually be paid and not reimbursable.

The amount of the IRWE is generally deducted from the gross income for that same month. Typical expenses include medications and medical devices.

Blind Work Expenses (BWE)

Any work-related item paid by a blind individual under age 65 may be deducted from gross earnings as a BWE. Some of the more common deductions include:

  • Federal and local income taxes,
  • Cost of at-work meals, and
  • Transportation.

Plan for Achieving Self-Support (PASS)

A blind or disabled individual under age 65 may set aside income or resources, and have them excluded in order to fulfill a PASS. The plan must be in writing and approved by the County. Any money saved for a PASS must be kept separate from other resources.

Note: Because a PASS is only available to persons under age 65, this situation is uncommon in the CAPI population. If it does occur, a Social Worker must be involved in establishing an appropriate plan.

Related Topics

Unearned Income