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Emancipated Minors and the Determination of Income on Affordable Housing Properties

The determination of income for affordable housing developments (e.g., HUD/Rural Development/ LIHTC) depends on whether a household member is an "adult" or a "dependent," as defined by HUD regulation. The definition of these terms is found in HUD Handbook 4350.3 and is fairly straightforward. A person is considered an adult if he or she is:18 or older and not disabled or a full-time student; orAn "emancipated minor." Property managers often struggle with how to define an "emancipated minor." This article provides guidance on how to determine whether a person under the age of 18 is an emancipated minor. However, this article does not provide legal advice, and since emancipation of minors is a state-law issue, owners and managers should rely on local counsel for legal guidance. What is an "Emancipated Minor?" An emancipated minor is a person under the age of 18 (usually) who is legally deemed an adult under state law. In most states, individuals may not enter into contracts until they reach the age of majority (usually 18). However, there are circumstances under which minors may enter into contracts - even if they are not emancipated. The law is designed to protect children (minors) by preventing adults from entering into contracts with them. This means that a contract with a minor may or may not be binding, depending on the circumstances. In order to legally be bound by an agreement, the individuals who enter into the agreement must possess the capacity to form the proper intent to meet the terms of the agreement. Two aspects of "capacity" are recognized: (1) the mental capacity to form the intent to commit an act; and (2) the maturity, or the roughly objective measure of the ability to form a legal intent. It is maintained that when a child reaches a certain age [normally 18], his or her capacity to form the proper intent matures - thus they have reached the age of "majority." At this point, a person can be held accountable for his or her actions. In some states, the age of majority is 19 (Alabama and Nebraska) and in Mississippi is it 21. Some states permit minors who are living apart from their parents and supporting themselves to be emancipated. This means that the minor may be treated as an adult for legal purposes. The minimum age for majority (emancipation) is sometimes set out in state statute but is frequently determined by common law. In general, contracts with minors are "voidable" at the option of the minor but are binding on the adult. In other words, minors may back out of an agreement with an adult, but not vice versa. This is based on the legal premise that while adults are capable of understanding the requirements of entering into a contract, children are not - or at least may not be. However, even here there are exceptions. E.g., if a transaction provides significant benefits to a minor, the transaction may be binding on the minor. Typical exceptions to a minor s right to void a contract include: Contracts for necessities such as food, lodging, and medical services; andStatutory exceptions including insurance and student loans. These exceptions seem to infer that a minor cannot avoid complying with a residential lease. However, minors often avoid lease responsibilities by claiming that they were runaways when they signed the lease. In these cases, since the child could return home to their families, the housing was not a "necessity," - thus voiding the requirement that the contract be for necessary services. This argument has led to many courts dismissing landlord claims against minors. However, emancipated minors are almost always found legally responsible for contracts they enter into. Emancipation is a state law issue, but emancipated minors always include: Legally married minors;Minors in the military; andCourt emancipated minors. Emancipation Through Marriage In certain states (e.g., Pennsylvania), if a child marries prior to age 18, that child is automatically emancipated - i.e., specific court permission is not required. Emancipation Through the Military This type of emancipation is applicable only for 17-year olds, since this is the minimum age for joining the military. This also requires the permission of a parent or legal guardian. Emancipation Through Court Order This option is not available in all states (e.g., Delaware and Maryland). In states where court ordered emancipation is permitted, it is often restricted to minors age 16 and above. However, it is lower in some states, such as California where minors as young as age 14 may become emancipated (this may well be related to child-actors). Ultimately, entering into leases with non-emancipated minors is strongly discouraged. Landlords may find that it is difficult (if not impossible) to enforce such leases. Also, keep in mind that all income of emancipated minors should be counted - both earned and unearned - as would be the case with any adult.

Affordable Housing Credit Improvement Act Gaining Support

Since its introduction in June 2019, the Affordable Housing Credit Improvement Act has garnered more support and co-sponsorships from Congressional members. If enacted into law, the legislation will increase the annual allocation of low-income housing tax credits by 50 percent and would expand the tax-exempt bond program. If this happens, it will result in the building of more than 450,000 additional affordable housing units over the next ten years and generate $48.5 billion in wages and business income, $19.1 billion in tax revenue, and 510,000 jobs. As of October 1, 2019, the bill has 93 sponsors and co-sponsors in the house (over 21 percent of all House members) and 22 sponsors and co-sponsors in the Senate (22 percent of all Senators). While the remaining legislative year is short, it is possible that this Act could become law this year. If not, based on the growing Congressional support, a 2020 passage will certainly be possible.

Social Security COLA - 2020

The federal government announced on October 10, 2019 that the Social Security Cost of Live Adjustment (COLA) for 2020 will be 1.6%.  This increase will provide an additional $24 per month for the average retiree. This is significantly less than the 2019 increase of 2.8% and will not keep up with the actual cost of living for seniors who depend on SS as their primary source of income. Social Security recipients will receive a notice in the mail in early December showing their new benefit amount. Recipients will see the increase in their January 2020 payment. Owners and managers of properties that are required to determine the income of residents should use the new COLA SS rate when projecting the income of applicants and residents. This also affects persons receiving SSI, VA pensions, Civil Service Pensions and Railroad Retirement.

NCSHA Provides Updated LIHTC Compliance Forms

The National Council for State Housing Agencies (NCSHA) has released updated model compliance forms for housing credit developments. Virtually all Housing Credit agencies (HCAs) require Housing Credit development owners to use specific forms in their compliance reporting. NCSHA, in collaboration with its members, has developed model compliance forms over the years and has recently released updated versions of these forms. NCSHA has updates seven different forms: Owner s Certification of Continuing Program Compliance;Tenant Income Certification;Employment Verification;Certification of Zero Income;Under $5,000 Asset Certification;Student Self-Certification; andStudent Status and Financial Aid Verification NCSHA is encouraging HCAs to adopt these model forms in order to standardize compliance monitoring practices across all states. However, no HCA is required to use the forms and if they choose to do so, may adapt the forms to suit their needs. While the forms have been created for HCAs to use as desired, they may also be used by individual owners/managers of LIHTC properties, if approved by the applicable HCA. All owners and managers of LIHTC properties should check with their HCAs regarding required forms relating to LIHTC compliance.

HUD Publishes Proposed Rule on Implementation of The Housing Opportunity Through Modernization Act of 2016 (HOTMA)

HUD published a proposed rule implementing The Housing Opportunity Through Modernization Act of 2016 (HOTMA) in the federal register on September 17, 2019. HOTMA was enacted on July 29, 2016. This rule would make sweeping changes to current HUD programs, including public housing and project-based Section 8, especially with regard to income calculation and reviews. Other major changes include the continued occupancy of public housing residents with increases in income. The rule is also intended to create consistency between various HUD programs, so there would be changes to the HOME, Housing Trust Fund, and Housing Opportunities for Persons with Aids programs. Comments on the proposed rule are due no later than November 18, 2019. Following is an overview of the major changes that would occur if the final rule is adopted. Income Reexaminations Reviews of family income shall be made upon the request of a family at any time the income or deductions of the family change by an amount that is estimated to result in a decrease of 10 percent or more in annual adjusted income, or of such lower amount as HUD may establish or permit the PHA or owner to establish. Interim recertifications will not be required if the decrease in adjusted income is less than 10 percent, but PHAs or owners will be able to establish policies to conduct interims when income decreases by less than 10 percent.PHAs and owners must conduct an interim reexamination of income at any time the family s adjusted income is estimated to have increased by 10 percent or more. However, PHAs and owners will not be required to conduct an interim for increases in income during the last three months of a certification period. In a major change, increases due to employment income will not be considered when determining whether a household s income has increased, unless the increase in earned income corresponds to previous decreases resulting from the family s request for an interim reexamination. Calculation of Family Income For purposes of move-in (initial occupancy), the initial provision of housing assistance, or for an interim reexamination of family income, the income for the upcoming year must be estimated (this is in line with current rules). In determining annual income for annual recertifications, the proposed rule requires that the PHA or owner use the income of the family as determined by the PHA or owner for the preceding year, taking into account any changes in income as reflected on interim certifications during the year. In cases where an interim recertification was not done because the change in income was less than 10 percent, the income will be adjusted to reflect the change in income. De Minimis Error A PHA or owner will not be out of compliance with the income determination requirements due to de minimis (minor) errors in the determination of income. HUD is proposing to define "de minimis" as any error where the calculation of income varies from the correct income by no more than 5 percent. However, the PHA or owner will still be required to take corrective action to repay a family if the error resulted in the family being overcharged for their rent. Definition of Annual Income The proposed regulation provides a new definition of income. This proposed rule would specify that annual income also includes the imputed return on assets over $50,000, based on the current passbook savings rate if the actual income from assets cannot be computed. It appears that this may change the requirement as it now exists to count the higher of the actual or imputed income to assets. The language in the proposed rule would require that if actual income from assets can be determined, it must be used - even if less than imputed income. The $50,000 figure will be adjusted for inflation. Income sources that were previously included in annual income are generally unchanged. Income Exclusions The proposed rule removes current exclusions for inheritances, capital gains, gifts, and other sporadic income. HUD seems to be taking the position that these amounts should be included in annual income. Based on this change, realized capital gains obtained from the sale of property in a given year would be included as income. The value of unrealized capital gains - meaning the value of any increase in an asset from one year to the next - would be included under the definition of Net Family Assets. Earnings in excess of $480 for full time student dependents age 18 or older and for adoption assistance in excess of $480 per child will still be excluded, but the $480 will be adjusted annually based on the inflation rate. Currently, the earned income of foster adults is counted, but under the proposed regulation, such income will be excluded. Under the proposed rule, educational assistance relating to books and room and board will also be excluded, which is not currently the case. Under current law, only the medical portion of the Aid and Attendance program for veterans is excluded. The proposed rule excludes the full amount of Aid and Attendance. Adjusted Income The $480 dependent deduction would remain in place but would be adjusted annually for inflation, adjusted to the next lowest multiple of $25. The one-time elderly deduction would increase from $400 to $525, adjusted annually for inflation. All other deductions currently permitted would remain. However, the deduction for medical expenses, which is now permitted when such expenses exceed 3% of gross income, would not be permitted until the expenses exceed 10% of gross income. This means that families who receive a health and medical expense deduction may see a significant increase in their adjusted income and rent. If the family can demonstrate a hardship resulting in an inability to pay the rent as a result in the change in the medical deduction, the PHA or owner will be required to recalculate the family s adjusted income. In such case, the deduction would be the amount in excess of 6.5% of the family s annual income instead of 10%. This hardship exemption would expire at the family s next regular income reexamination or at such time as the owner determines that the family can afford the rent based on the regular 10% adjustment, whichever comes first. The childcare deduction remains in place, but the proposed rule allows a hardship exemption for this deduction. Under this rule, a hardship exemption would be provided to allow the deduction for reasonable childcare costs to continue in certain circumstances for a family that no longer has a member that is employed or seeking to further his or her education. The family would be required to demonstrate that their inability to pay the increased rent is due to the loss of the childcare deduction. The family would also have to demonstrate why the childcare expense remains necessary even though no family member is employed, actively seeking employment or furthering his or her education. For example, the family member may have had to temporarily suspend their educational pursuits as the result of injury or illness and due to the injury or illness, they are unable to be the primary full-time caregiver for the child. This exemption would be temporary and would end no later than the family s next regular reexamination. Income Limitation for Existing Public Housing Residents While already in place through prior HUD guidance, the proposed rule would create a new 24 CFR 960-507, which would place an income limitation on a public housing tenancy for families at 120 percent of AMI.  This limit would not apply to PHAs operating fewer than 250 public housing units that have rented to over-income households because there are no income eligible families on the waiting list or applying for public housing assistance. If a family s income has exceeded the 120% limit for two consecutive years, a PHA must terminate the family s tenancy within six months after the expiration of the two year period or charge a monthly rent equal to the greater of (1) the applicable Fair Market Rent (FMR); or (2) the amount of monthly subsidy for the unit including amounts from the operating and capital fund. Limitation on Assets The regulation would limit the amount and type of assets that a family assisted under public housing or Section 8 can possess. Families would be ineligible for public housing or Section 8 assistance if their net family assets exceed $100,000, adjusted annually for inflation.Families could not receive assistance if they have a present ownership interest in, legal right to reside in, and the effective legal authority to sell real property in the jurisdiction in which the property is located that is suitable for occupancy by the family as a residence. This provision excludes any property that is jointly owned by a member of the family and another individual or individuals who would not reside with the family. It would also not apply if the family is receiving HUD assistance while living in the home, is a victim of domestic violence, or is offering the home for sale, as demonstrated by a listing agreement.The proposed rule excludes the value of any accounts approved by the IRS as retirement accounts, including IRAs, employer retirement plans, and retirement plans for self-employed individuals.Any income distributed from any trust will be considered income, except in the case of distributions from non-revocable trusts, made to cover the medical expenses for a minor.The proposed rule would revise the existing exclusion in HUD s regulations for the value of necessary items of personal property, to provide that the exclusion will apply to items of personal property with a total value under $50,000, other than necessary items. Necessary items may include items such as a car used for personal transportation. Authorization for Financial Disclosures Under current regulation, Consent to Release forms are valid for 15-months after they are signed. The proposed regulation will make the forms valid until the earliest of: (1) the rendering of a final adverse decision for an applicant; (2) the cessation of a participant s eligibility for assistance from HUD and the PHA; or (3) the express revocation by the applicant of the authorization, in a written notification to HUD. The proposed regulation will also incorporate the new requirements into the HOPWA, HOME,  and HTF. As noted earlier, comments on this proposed regulation are due by November 18, 2019. The changes outlined in this regulation are extensive and all PHAs and owners of affected properties should carefully review and comment on the proposed regulation. After the comment period, HUD will review the comments and publish a final rule with appropriate changes from the proposed rule. No final rule should be expected prior to early to mid-2020.

Fair Housing Definition of a Dwelling

The Fair Housing Act (FHA) applies to "dwellings." This raises the technical issue of what a dwelling is. The answer is not as simple as one may think. The statute s definition of a dwelling includes any building occupied or intended to be occupied as a residence and any vacant land sold or leased for the construction of such a building. In addition to houses and apartments, the definition also includes mobile home parks, trailer courts, condominiums, cooperatives, and time-sharing properties. A building or land intended for non-residential use is not covered. What about temporary residences such as dormitories, homeless shelters, and extended care facilities? An early and influential decision in this area is United States v. Hughes Memorial Home, 396 F. Supp. 544 (W.D. VA. 1975). This was a private facility in VA that was established in 1922 to provide housing for orphans and other needy "white children of Virginia and North Carolina." Because the home would not accept black children, the Department of Justice (DOJ) brought a fair housing suit. The Home argued that it was not a dwelling, and therefore not subject to the FHA. Once admitted, a child was considered a permanent resident of the Home and the average length of stay was about four years. The children attended area schools during the day. The court held that while the term "residence" is not defined in the statute, the term should be given its ordinary dictionary meaning, which was "a temporary or permanent dwelling place, abode or habitation to which one intends to return as distinguished from the place of temporary sojourn or transient visit. The judge concluded, "the Home is far more than a place of temporary sojourn to the children who live there." Because the children were in fact, "residents" of the Home, the Home was a "dwelling" subject to the FHA. The basic principle established in this case is that in temporary residence cases, one must look at whether the occupants intend to remain in those residences for any substantial period of time. If occupancy is merely transient, as with most motel and hotel rooms, the property may be viewed as something less than a dwelling and would not be subject to the FHA. Seasonal dwellings, where the residents reside for substantial periods and return to them day after day are also considered dwellings for FH purposes (see United States v. Columbus Country Club, 915 F.2nd 877 (3rd Circuit 1990). How long a period of time is required to establish a residence as a "dwelling" under the FHA has not been definitively established, but it does not have to be long. In Lakeside Resort Enterprises, LP v. Board of Supervisors of Palmyra Township, 455 F.3d 154, 159-60 (3rd Cir. 2006, the court held that a proposed drug and alcohol treatment facility was a "dwelling" under the FHA because, its average stay of 14.8 days "satisfies (though barely)" the "place to return" factor. HUD has endorsed the following multi-factor test for determining whether a facility that includes short-term residencies is covered by the FHA: Length of stay;Whether the rental rate for the unit will be calculated a daily, weekly, monthly, or yearly basis; Whether the terms and length of occupancy will be established through a lease or other written agreement;What amenities will be included inside the unit, including kitchen facilities;How the purpose of the property will be marketed to the public;Whether the resident possesses the right to return to the property; andWhether the resident has anywhere else to which to return. The FHA covers nursing homes, retirement communities, college dormitories, boarding houses and residency hotels, housing for seasonal farm workers, and vacation homes, timeshares, and similar recreational properties. Whether a homeless shelter is a residence depends on circumstances, and prisons are "detention facilities," - not "residences." For most owners and managers of multifamily housing, defining a dwelling is simply an intellectual exercise. However, in the LIHTC field especially, many specialized types of housing (e.g., homeless) are being developed. In such cases, a full understanding of whether the particular property is considered a dwelling for purposes of the FHA is required. If an owner is in doubt as to how the definition may apply to their specific circumstances, legal counsel should be sought.

Information to Obtain When Assuming Management of a LIHTC Property

When assuming management of a Low-Income Housing Tax Credit (LIHTC) property during the 15-year compliance period, there is critical information the new agent must have. The following list provides a good starting point for the information to obtain when assuming management of one of these properties: Location of the Resident Files: All tenant files and other information relating to property operations must be at the site. Determine the location of the initial resident files and whether copies have been made.Required Minimum Set-Aside & Applicable Fraction: Determine the applicable fraction required for each building. Keep in mind that each building has a separate Building Identification Number (BIN) and this applicable fraction is applied per BIN. The IRS Forms 8609 for each BIN are a good source for determining the Minimum Set-Aside and applicable fraction. The 8609 will also confirm whether the project is deep rent skewed. Line 8b of the 8609 will also confirm whether or not it is a multiple building project.What are the requirements of the Extended Use Agreement (EUA)? A copy of the EUA should always be available at the site. This is the deed restriction between the owner and the Housing Finance Agency (HFA) that will outline any special set-asides in addition to the minimum set-aside shown on the 8609s. It is also a good idea to obtain a copy of the original LIHTC application to the HFA and clarify any differences between the application and the EUA, keeping in mind that the EUA is the legally binding document.Is the property subject to any other housing programs? It is common for LIHTC properties to be involved in more than just the tax credit program. Examples are the HOME program, Tax-Exempt Bonds, Rural Development Section 515, HUD Section 8, and the Federal Home Loan Board s Affordable Housing Program. In situations where there is more than one program present at a property, the most restrictive rules should be followed.Have there been past violations and if so, were they corrected? If there are any outstanding violations (as determined by examining any prior 8823s issued against the project), determine what is needed for correction and confirm how long the HFA is allowing for the correction. Prior to assuming management of a tax credit property, a new agent should request copies of any prior 8823s.Have there been any fair housing complaints against the property? If there are pending actions, get the files and talk to the attorney that is representing the property.Are any low-income households over-income? If the site is mixed-income (i.e., has both low-income and market units), determine if any low-income households currently have income in excess of 140% of the currently qualifying income limit (170% if the project is deep rent skewed). Request documentation that shows the Available Unit Rule (or deep rent skewing rule) is being followed. Examine the files of all households in a BIN that moved in after a household recertified with income in excess of the 140% or 170% levels.Are there any vacant units? If there are vacant units, confirm the following: (1) the last household in the unit was eligible; (2) the unit is suitable for occupancy; and (3) reasonable attempts are being made to rent the vacant units. Also, obtain copies of all marketing materials.When does the compliance period end? This information can be confirmed by reviewing the 8609s. Once the 15-year compliance period has ended, the EUA becomes the governing document for the property and any HFA year-15 requirements should be followed. All of the information outlined above is critical to obtain prior to assuming management of an existing LIHTC property. Once a new owner acquires an existing property, or a new management company assumes management, operational responsibilities shift to the new entity. Pleading ignorance of a problem at that point will not hold water with either an HFA or the IRS. 

Determining the Income of LIHTC Applicants and Residents

The determination of income is a primary requirement when determining the eligibility of applicants and residents at Low-Income Housing Tax Credit (LIHTC) Properties. While individual Housing Finance Agencies (HFAs) have their own requirements relating to the determination of income, there are some "best practices" that may be applied in most jurisdictions. Some types of income - especially relating to employment - can be challenging to calculate. This article will provide suggestions and recommendations for determining various types of income, but all LIHTC managers should be aware of any specific requirements of their HFA. Regular Income There are generally three ways to determine income from employment: (1) a verification of annual income (VOE) from the employer; (2) a projection from year-to-date [YTD) income, which may be found on an employment verification or pay stubs; and (3) the average number of hours/overtime hours as shown on pay stubs. Generally, if there is a different result when calculating income using more than one of the methods, it is recommended that management follow up to determine the "most likely" income and use that as the certified income. However, some HFAs require the use of the "highest" result when the calculations show different figures, so managers should have a clear understanding of the HFA requirement in this area. If there is conflicting information between documents (e.g., the VOE and pay stubs), managers should attempt to obtain written clarification from the employer. If written clarification cannot be obtained, it may be possible to use an oral clarification. It is also a good idea to request additional pay stubs, which may enable a more accurate determination of income. Self-Employment In general, the following information is recommended for verifying income from self-employment: Tax returns from the prior one to three years. These should be obtained through the IRS transcript service (1-800-908-9946); the use of self-prepared returns is not recommended since there is no way to know if the returns were actually sent to the IRS.Note: for self-employed individuals who claim not to file tax returns, managers should obtain a completed copy of IRS Form 4506-T - Request for Verification of Tax Filing with the IRS - in order to verify that no return has been filed. The IRS requires that all self-employed individuals making $400 or more per year must file a federal tax return, regardless of tax liability.If a 4506-T shows that no return has been filed, the following information may be obtained to assist in determining self-employment income:Profit & Loss Statement; orStatements from recurring clientsIt is also recommended that all self-employed individuals provide an Affidavit of Self-Employment on which they state an estimate of their gross and net business income for the upcoming 12-months. Day Labor Day labor is generally applicable to a person who waits in a specified location to do various odd jobs and is paid with cash. Day Labor does not usually have a recurring clientele and can have a significant variance in terms of income or hours worked. In certain cases it is not possible to obtain third party verification of Day Labor. For this reason, a self-certification of income from the applicant/tenant may be the only option. However, before accepting such a self-certification, management should demonstrate due diligence in processing the certification. Such diligence will include a written statement from the applicant outlining details of their work, including: (1) dates of work; (2) work locations; (3) types of work; and (4) income earned for the work that is done. Since this is a type of work that can be very difficult to verify, management should ensure that any verification method used meets the requirements of the HFA. Anticipated Earnings Generally, income for the upcoming 12-months should be based on current circumstances, which should be annualized. It is not recommended that anticipated earnings be used unless there is documentation supporting such anticipation. For example, unless there is a pending offer of a salaried position - including a start date - no anticipation of employment income should be made. If the only form of income is from a household s "hope" for a future job, an HFA is very likely to question how the household will pay for rent, food, utilities, etc., and may require management to demonstrate how such items will be paid for. Cash Wages If an applicant claims that they do not receive pay stubs because they are paid in cash, the IRS has indicated that such individuals should be considered "independent contractors" and as such should file a 1040 tax return. In such cases, management should obtain a copy of the tax return (as outlined earlier) and should obtain a statement from the employer indicating the name of the employee, their position/title, and how much the employee is paid in cash each pay period. If a household that is paid in cash claims they do not file a tax return, the 4506-T (as noted above) should be required, verifying the non-filing status, in addition to the third party statement from the employer. Farm Labor Farm labor presents unique verification challenges due to the varying employment timeframes. The growing seasons are often determined based on weather and cannot be precisely predicted. If the applicant/tenant receives unemployment assistance during the off-season, only the unemployment received during the layoff period should be counted - i.e., the unemployment does not need to be annualized, as is normally the case. To adequately determine income eligibility for farm labor applicants, the following procedures are recommended: Maintain a spreadsheet tracking the growing seasons of the farms in the area around the property. This will provide a historical perspective of work and lay-off periods for prospective residents.Require a completed VOE showing the anticipated lay-off period.Obtain a payroll printout (in addition to piece count paystubs) that shows gross amounts earned per pay period.The payroll printout should include the name of the applicant/tenant, the farm they work for, and the pay rate of the employee. If this information is not included, the printout will not be an acceptable verification. Other Forms of Income Social Security and Supplemental Security Income (SSI): Most HFAs will accept the current year award letters for regular Social Security and a current Proof of Income Letter (with 120-days) for SSI. Note that some HFAs may require a confirmation of Social Security income if the Award Letter is more than 120-days old.Unemployment and TANF: Benefit letters dated within 120-days of the move-in/effective date should be obtained.Pensions, Annuity Payments, or any other form of recurring payment (excluding gifts): a document from the entity providing the payment dated within 120-days of the move-in/effective date should be obtained.Gifts: a signed and dated statement (notarized or witnessed) from the person providing the gift indicating the amount and frequency of the gift. An updated statement should be obtained for each recertification.Unemployment Income: If the tenant does not have a seasonal/recurring job, the unemployment income should be annualized for 52 weeks, even if a "maximum benefit" amount is noted on the verification letter. If the applicant/tenant has a seasonal job, recurring job, or a firm job offer, the unemployment should only be calculated for the period it will be received. Importance of Proper Verification If an HFA is not satisfied with the documentation of income in a file, it is very likely to request additional documentation to demonstrate household eligibility. Such documentation may include: Tax returns or W-2s for the move-in or recertification year;Additional paystubs;Clarification regarding the disposal of an asset; orVerification of the termination of employment Best Practice Forms There are certain forms every well-run LIHTC property will have - many of which are required by HFAs. Some of these forms are as follows: Comprehensive rental applications;Recertification Questionnaires;Child/Spousal Support Affidavits/Verifications;$5,000 and Under Asset Affidavits or third party verification when assets exceed $5,000;Student Status Affidavits;Survival Statements for assisted households claiming zero income; andLive-in Aide Verification Forms (if applicable). Ultimately, the HFAs will be looking for "due diligence" on the part of owners and managers. While each type of income will present its own challenges, the documentation outlined in this article will serve the purpose of verification in most cases.