Unearned Income

Unearned income is anything that is not earned income, including:

  • Disability benefits;
  • Unemployment benefits
  • Annuities and pensions;
  • Alimony and support payments;
  • Dividends, interest, and royalties;
  • Rental income;
  • Prizes and awards;
  • Gifts and inheritances;
  • In-kind support and maintenance;
  • Death benefits;
  • Federally funded public assistance (for example, CalWORKs); and
  • Guaranteed Income payments from certain programs. [Refer to "Guaranteed Income" in the subsection below].

Treatment of Unearned Income

Unearned income is counted in the month it is received.

Gross Amount Counted

The gross amount of the unearned income is counted BEFORE ANY DEDUCTIONS for:

  • Recovery of an overpayment from another benefit program.

    • Exception: Amounts withheld to recover overpayments are excluded if the individual previously received CAPI and another benefit simultaneously and the overpayment amount was included in computing the CAPI payment.

  • Any garnishment or withholding to pay a debt or legal obligation, such as child support.
  • Any withholding to make payments or to pay insurance premiums, such as Medicare.

Less Than Gross Amount Counted

Less than the gross amount of unearned income is counted for:

  • Insurance settlements, from which costs incurred in getting payment, such as legal and medical expenses, are subtracted.
  • Retroactive checks from another benefit program, which may have legal fees subtracted if the fees are associated with obtaining the retroactive payment.
  • Death benefits, from which any portion used to pay for last illness or burial expenses of the deceased may be subtracted.
  • Veteran’s Benefits, from which any portion paid to the recipient because of a dependent is subtracted from the gross benefit.

Unearned Income Exclusions

Unearned income exclusions are applied in the following order:

  1. Income excluded by other Federal laws, such as Agent Orange and Japanese Internment payments;
  2. Assistance based on need which is wholly funded by a state or political subdivision (e.g. payments from the CDSS GI Pilot Program, etc. [Refer to "Guaranteed Income" in the subsection below]);
  3. Any portion of a grant or scholarship used for paying educational expenses;
  4. Food raised and consumed by the recipient and family;
  5. Disaster Relief and Emergency Assistance provided under Federal statute;
  6. Up to $20 of irregular and infrequent income received no more than once per quarter, such as interest;
  7. Payments based on state residence (Alaska);
  8. Payments for providing foster care to an ineligible child;
  9. Interest earned on excluded burial funds;
  10. In-kind home energy assistance from a non-profit agency or utility company;
  11. One-third of support payments for eligible children;
  12. The first $20 of any unearned income in a month (The $20 exclusion does not apply to a needs-based benefit that is totally or partially funded by the federal government. The most common examples are TANF and VA pensions.);
  13. Any unearned income used to fulfill an approved PASS [Refer to “Earned Income Exclusions/Deductions”];
  14. Subsidized housing assistance;
  15. Interest earned on excluded burial space;
  16. Value of a commercial airline ticket for U.S. travel received as a gift;
  17. Payments from a state-based fund to aid victims of violent crime; and
  18. Relocation assistance.

Guaranteed Income

The funding source(s) and eligibility criteria of a Guaranteed Income (GI) program must be reviewed to determine whether the payments will be excluded as income for CAPI or be counted as unearned income. EWs can review the GI tracking list to determine if the GI program is already known and whether or not payments will be exempt. If the GI program is not listed on the tracking list, the EW can provide the SCD 2620 to the client for the GI program to complete.

Payments from the California Department of Social Services (CDSS) GI Pilot Program are always excluded. For all other GI programs, payments will only be excluded if both of the following criteria are met:

  • The GI program is wholly funded by the state or a political subdivision (i.e. county, city, etc.), and
  • The payments can be considered "assistance based on need" (ABON) due to the GI program using income as an eligibility factor. 

Below are a few possible scenarios:

Example 1 - excluded:Example 1 - excluded:Santa Clara County implemented a GI program that is entirely county funded and uses a person’s income to determine eligibility. This GI income is considered ABON and is excluded from being counted as income when determining CAPI eligibility. 

Example 2 - counted:Example 2 - counted:Sunnyvale implemented a GI program that is both city and privately funded. Because the GI program is partly funded privately, assistance received from the program is not ABON and must be counted as unearned income for CAPI eligibility.  

Example 3 - counted:Example 3 - counted: Santa Clara County implemented a GI program that is entirely county funded but does not use income to determine eligibility. Therefore, assistance received from this program would not qualify as ABON and must be counted as unearned income for the purpose of CAPI eligibility. 

Reminder: Even if the GI payments are determined to be countable, other unearned income exclusions may apply (e.g. if GI payments are the only income the client has, then $20 could be excluded from the payments, etc.)

Related Topics

Earned Income