(1)

Unearned income is any income paid to the household for which no work is performed. Consider the following unearned income if received by any member of the household, including children.

  1. Child Support payments paid to the household whether paid directly to the household by the individual or through the Division of Child Support Enforcement,
  1. Supplemental Security Income (SSI) payments made to any adult in the household from the Social Security Administration (SSA). Count the actual amount of the SSI received by the individual,
  1. Retirement, Survivors and Disability Insurance (RSDI) payments made to any member of the household from the Social Security Administration (SSA). Count the gross amount of RSDI before the deduction for the SMI premium,
  1. Annuities, (Prorate over a twelve (12) month)
  1. Lottery winnings paid annually, (Pro-rate over a twelve (12) months)
  1. Pensions,
  1. Retirement payments,
  1. Veteran's or disability benefits, including Agent Orange payments issued by the Department of Veterans Affairs,
  1. Worker's compensation,
  1. Unemployment insurance benefits,
  1. Strike benefits,
  1. Any portion of a KTAP grant, excluding payee only cases, which do not include the parent in the KTAP grant,
  1. Statutory benefits which are due the household but which are diverted to a third party or protective payee for purposes such as managing a household's expenses even if the household has the option of receiving a direct payment,
  1. All money payments from any source which can be construed as a gain or benefit, including, but not limited to royalties and payments from government sponsored programs unless otherwise excluded,
  1. Contributions made to the household from individuals not living with the family,
  1. Monies that are legally obligated and otherwise payable to the household, but which are diverted by the provider of the payment to a third party for household expenses are counted as income. The distinction is whether the person or organization making the payment on behalf of a household is using funds that otherwise are payable to the household. If an employer, or agency who owes these funds to a household diverts them instead to a third party to pay for a household expense, these payments are still counted as income to the household (e.g., garnishment on wages).

NOTE: Consider income derived from rental property as earned income for the earned income deduction only if a member of the household is actively engaged in the management of the property at least an average of twenty (20) hours per week. If the twenty (20) hours per week criteria is not met, the net income is considered unearned. Whether the income is considered earned or unearned, exclude the cost of doing business.

S Corporation – Any “dividends the household receives from the corporation are considered as unearned income. Dividends are most often reflected on the individual income tax return line which includes Ordinary/qualified dividends.