Use Questionnaire to Avoid Misunderstandings About Household Income

When you certify or recertify households for tax credit housing, IRS rules require you to estimate how much income household members expect to receive in the next 12 months. Without this information, you can’t certify or recertify the household’s eligibility.

But getting households to reveal all their sources of income is tough. Simply asking, “What’s your household’s annual income?” invites innocent mistakes as well as fraud. For instance, households may not view child support payments they get as income they have to report when applying for tax credit housing.

To prevent confusion, you should use an income questionnaire. A good questionnaire asks if household members expect to get specific types of income in the next 12 months. Because IRS regulations say to use HUD rules to establish income eligibility, your questionnaire should list those types of income that HUD requires managers to count for assisted housing purposes.

We’ve created a Model Form: Identify Sources of Household Income that you can use. Check with your attorney and your state housing finance agency to make sure this questionnaire is right for your site.

Benefits of Income Questionnaire

Households may not understand what you mean by the term “income.” Using an income questionnaire can increase your chances of getting complete information. It shows households what income means, so honest people can avoid innocent mistakes caused by not fully understanding the term. And if you later find that some household income wasn’t disclosed, having a completed questionnaire in hand will make it harder for dishonest households to claim that they didn’t know, for example, that a particular source of money counted as income.

The questionnaire also serves to educate your site personnel. It will help them answer questions from households about what counts as income.

Finally, the questionnaire serves as a reference source to show auditors that you took steps to certify household income in compliance with tax credit rules. So keep a copy of the questionnaire in the household’s file.

Inform Household about Questionnaire

Include the questionnaire as part of the application or recertification paperwork you ask each head of household to complete. Explain that the IRS rules require you to get information about household income so that you can properly determine if the household is eligible for the program. You can also convey that income is counted for anyone 18 or older (or legally emancipated). However, if the income is unearned income such as a grant or benefit, it is counted for all household members including minors.

Get Yes or No Answers Only

Ask each household head to read the questionnaire and to check yes if a household member gets a particular type of income and no if none of the household members do. Warn household heads that it’s a crime to lie when giving you information about their households.

Remember, this is just the first step in a detailed process. At this point you only want to know if, for example, a dependent gets Social Security benefits. After the household head fills out the questionnaire, you must verify, through third parties, the exact amount of income of each type that’s checked yes. Think of the questionnaire as a tool to spotlight the sources of income and narrow down your work for later.