DI 10520.030: Determining When IRWE Are Deductible and How They Are Distributed

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~~Effective Dates: 01/05/2018 - Present~~
Effective Dates: 01/10/2018 - Present
TN 6 (03-04)
DI 10520.030 Determining When IRWE Are Deductible and How They Are Distributed
A. Policy
1. Items
Payments the person with a disability makes after November 30, 1980 for items needed in order to work are deductible whether the item is purchased before or after the person with a disability begins working, if the person needs the item in order to work.
2. Services
Payments the person with a disability makes after November 30, 1980 for services are deductible if the services are received while the person is working. Deductions for services may be made even though a person must leave work temporarily to receive the services. The costs of any services received before the person begins working are not deductible.
3. Evaluation of work activity
The SGA decision in a case involving IRWE for items or services necessary for the person with a disability to work generally will be based upon the person's earnings. The exceptions to this would be:
* a situation in which a person with a disability is in a position to control or manipulate the amount of his or her earnings; e.g., the person is self-employed and the value of services rendered is clearly worth an amount greater than the earnings received; or
* the person’s earnings are being subsidized.
In these situations, it will be necessary to first determine the value of services being rendered and then deduct the IRWE. See the guidelines in DI 10505.020 concerning work by employees, and DI 10510.010 concerning work by self-employed persons and/or DI 10505.010 for policy on subsidy.
Other than the exceptions above, the deduction of IRWE does not alter any of the basic concepts for evaluating SGA, e.g., averaging earnings, establishing disability, or determining whether a person's disability has ceased. However, after a person's disability has ceased because of SGA, and the only issue is whether he or she is entitled to benefit payments during any remaining months of the extended period of eligibility, the matter of SGA must be determined on a month-to-month basis and the concept of averaging earnings is not applicable. (See DI 13010.210 concerning extension of eligibility, for benefits based on disability.)
4. Trial work period
IRWE provisions do not apply for the purpose of determining a service month in the TWP. Do not make IRWE deductions during the TWP.
5. Uniformity of deductions
The amount of the deductions must be determined in a uniform manner in both the DI and SSI programs. Therefore, the amount of deductions must be the same for both SGA determinations and SSI payment purposes. (For exception, see DI 10520.030A.7.)
6. Amount of deductions
The amount of IRWE to be deducted from earnings or from earned income is the total allowable amount (subject to reasonable limits) that the person with a disability pays for the item or service. The amount to be deducted is not determined by assigning a certain portion of the expense to work activity and a certain portion to nonwork activity (e.g., 40 percent of the time at work and 60 percent of the time at home).
EXCEPTIONS:
Attendant care services (See DI 10520.010D.) and vehicle operating expenses (See DI 10520.010J.). The amount deducted, however, is subject to reasonable limits (See DI 10520.010C.).
7. SSI plans to achieve self-support (PASS)
When determining countable income, IRWE are not deductible from earned income if the income used for the purchase of the impairment-related item or service is deducted as part of a plan to achieve self-support (PASS) for the same period. However, any portion of the payment for an item or service paid with income that is not deducted as part of the PASS can be deducted as an IRWE if the expense itself meets the requirements for an IRWE deduction. For purposes of determining SGA, the entire amount paid for the item or service is deductible.
EXAMPLE:
A concurrently entitled beneficiary purchases an impairment-related item necessary to achieve his designated occupational goal at a cost of $600. He pays the bill with $500 designated for his PASS and $100 of other income. For purposes of determining title XVI countable income, $100 is deductible. However, for title II purposes, the entire $600 is deductible as an IRWE. (If only $550 is deducible because of the reasonable limits provision, for countable income purposes, $50 is deductible and for SGA purposes $550 is deductible.)
B. Procedure for kinds of IRWE payments and methods of deduction
1. Recurring monthly expenses
Some IRWE are paid on a recurring basis. In the case of durable equipment (respirator, wheelchair, etc.), the cost is ordinarily paid over a period of time under some type of installment purchase plan. In addition to the cost of the purchased item, interest and other normal charges (e.g., sales tax) that a person with a disability pays on the purchase will be deductible. Generally, the amount the person pays monthly will be the deductible amount. In the case of ongoing attendant care or medical services (e.g., physical therapy), the costs are generally paid and are deducted on a monthly basis. Such costs are deductible only if the services are received while the person is working. If the entire cost of the purchased item cannot be deducted because of the reasonable limits provision, the interest and other charges must be proportionately reduced.
2. Recurring non-monthly expenses
A special rule applies in situations where a person with a disability pays recurring IRWEs less frequently than monthly, e.g., quarterly. These expenses either may be deducted entirely in the month payment is made or allocated over the months in the payment period, whichever the person selects.
EXAMPLE 1:
A person with a disability starts work in October 2001; she earns and receives $800 a month. In the same month she purchases a medical device at a cost of $4,800 plus interest charges of $720. The term of the installment contract is 48 months. No down payment is made, and she begins her monthly payments in October. The monthly allowable deduction for the item is $115 ($5,520 divided by 48) for each month of work during the 48 months. (If, instead of $4,800, only $4,200 is deductible because of the reasonable limits provision, since $4,200 is seven-eighths of $4,800, only $630 of interest charges, or seven-eighths of $720, is deductible.)
3. Nonrecurring expenses
Part or all of a person's IRWE may not be recurring (e.g., the person with a disability makes a one-time payment in full for an item or service). Such nonrecurring expenses either may be deducted entirely in 1 month, or may be prorated over a 12-consecutive month period, whichever the person chooses. He or she should consider which method will provide more benefits, including the amount of SSI payment in SSI cases.
EXAMPLE 2:
A person with a disability starts work in October 2001; he earns and receives $950 a month. In the same month he purchases and pays for a deductible item at a cost of $250. In this situation a $250 deduction for October 2001 can be allowed, reducing the person's earnings below SGA for that month.
In the above example, if the person's earnings are just a few dollars above the SGA earnings amount, he would probably choose to have the $250 payment projected over the 1-year period, October 2001 to September 2002, thus providing an allowable deduction of $20.83 a month for each month during that period to reduce the earnings below the SGA level for 12 months.
4. Down payments
A person with a disability may make a down payment on an impairment-related item, or possibly a service, to be followed by regular monthly payments. Such down payments either are deducted entirely in 1 month, or allocated over a 12-consecutive month period, whichever the person chooses. Explain that the down payment may be allocated in order to provide for uniform monthly deductions.
When the down payment is allocated over a 12-month period, make the following calculation:
* determine the total payment made over a 12-consecutive month period beginning with the month of down payment (i.e., the down payment plus the regular monthly payments that are made during that period) and
* divide the total equally over the 12 months.
Beginning with the 13th month, deduct the regular monthly payment amount. If the regular monthly payments extend for less than 12 months, allocate the total amount payable (down payment plus monthly payments) over the shorter period.
EXAMPLE 3:
A person with a disability starts working in October 2001, at which time she purchases special equipment at a cost of $4,800, paying $1,200 down. The balance of $3,600, plus interest of $540, is to be repaid in 36 installments of $115 a month beginning November 2001. The person earns and receives $800 a month. In this situation a $205.42 monthly deduction is allowed beginning October 2001 and ending in September 2002. After September 2002, the deduction amount is the regular monthly payment of $115. Calculation for above example:
Down payment in 10/01
$1,200
Monthly payments 11/01 through 09/02
+1,265
$2,465 /12 = $205.42
EXAMPLE 4:
While working, a person with a disability purchases a deductible item in July 2001, paying $1,450 down. (The person earns and receives $500 a month.) However, the first monthly payment of $125 is not due until September 2001. In this situation, a $225 monthly deduction is allowed beginning in July 2001 and ending in June 2002. After June 2002, the deduction amount is the regular monthly payment of $125. Calculation for above example:
Down payment in 07/01
$1,450
Monthly payments 09/01 through 06/02
+1,250
$2,700 /12 = $225
5. Rentals or leases
When a person with a disability rents or leases an item while working, the allowable deductible amount is the actual monthly charge. Where the rental or lease payments are made other than monthly (e.g., weekly), it is necessary to compute monthly payment amounts. As with other costs, rental or lease payments are subject to the reasonable limits provision. (See DI 10520.025D.) An amount that does not exceed the standard or normal rental or lease charge for the same or similar item in the person's community is considered reasonable.
C. Procedure for IRWE payments made before work started
In most instances, a person with a disability is working in the month in which an IRWE is both incurred and paid. Therefore, the payment amount is directly deductible from earnings attributable to the month of work activity. Occasionally, however, an IRWE payment is made before the first or after the last month of work activity. Specific limitations are applicable to the deduction of such payments from earnings.
1. The expense must be for a durable item
Durable items are things that can be used repeatedly. These include, but are not limited to, medical devices (e.g., wheelchairs, braces), prostheses, work-related equipment (e.g., typing aids, electronic visual aids), residential modifications, nonmedical appliances (e.g., air cleaner), service animals and vehicle modifications. Things that are not considered durable items (and not deductible) include, but are not limited to, services, drugs, oxygen, diagnostic procedures, medical supplies (e.g., catheters, incontinence pads), and vehicle operating costs.
2. The expense must be made within a timeframe
The expenditure may be a monthly (recurring) payment, a one-time (nonrecurring) payment, or a down payment, but may not be made for a rented or leased item; and it must be made sometime in the 11 months preceding the month work starts. The person must be disabled when payment is made. Payments made prior to the established onset date of disability are not deductible. As with all expenses, the person must pay the expense in cash (including checks or other forms of money) rather than in kind, and it must be within the reasonable limits guidelines. The item must be required in order for the person to work (i.e., the person must use the item while working), and this need must be verified.
a. How to determine deductible amount for recurring expenses
When an item is paid for in installments, determine the total amount of the installment payments (including a down payment) made for the particular item during the 11 months preceding the month work starts. This total amount is considered paid in the month of the first payment (for that item) within this 11-month period.
Allocate the total of these payments (installment and down payment, if any) over a 12-month period beginning with the month of the first payment (but never earlier than 11 months before the month work started). Deduct only that part of the total which is apportioned to the month work begins and the following months.
The deductible amount, as determined by this formula, is considered to be made in the first month of work, and is deductible in the same manner as a nonrecurring expense. That is, the total deductible amount is deducted in 1 month or allocated over a 12-consecutive month period, whichever the person selects.
EXAMPLE:
A person with a disability purchases an item in June 2002, 4 months before the month work begins in October 2002. He begins monthly payments of $240 at that time. He/she will have paid a total of $960 preceding the month work started. This amount is considered paid in the first month of payment (the fourth month before the month work begins). The total deductible amount is $640 ($960 divided by 12 months multiplied by 8 work months, 10/02 through 5/03).
This amount is deducted at one time or allocated over a 12-consecutive month period, whichever the person selects, beginning with the first month of work (for purposes of determining SGA), or the first month income is received (for purposes of determining SSI countable earned income).
(The monthly payments of $240 that the person continues to make while working will also be deductible in accordance with the instructions for recurring expenses.)
b. How to determine deductible amount for nonrecurring expenses
When an item is paid for with a one-time payment during the 11 months preceding the month work started, allocate the payment over a 12-month period beginning with the month of payment. Deduct only that part of the payment which is apportioned to the month work began and the following months.
The deductible amount, as determined by this formula, is considered to have been made in the first month of work, and is deductible in the same manner as a nonrecurring expense. That is, the total deductible amount is deducted in 1 month or allocated over a 12-consecutive month period, whichever the person selects.
EXAMPLE:
An item is purchased in February 2002, 7 months before the month work begins in September 2002. It is paid for with a one-time payment of $300. The total deductible amount will be $125 ($300 divided by 12 multiplied by 5 work months, 9/02 through 1/03). If an item is purchased 3 months before the month work begins and is paid for with a one-time payment of $600, the deductible amount will be $450 ($600 divided by 12 multiplied by 9 work months).
This amount will be deducted at one time or allocated over a 12-consecutive month period, whichever the person selects, beginning with the first month of work (for purposes of determining SGA), or the first month income is received (for purposes of determining SSI countable earned income).
D. Procedure for IRWE payment made before earned income received
If a person with a disability receiving SSI starts working and makes an IRWE payment in one month but does not receive earned income until the following month, deduct (or begin allocating) the payment amount in the first month earned income is received.
EXAMPLE:
A person with a disability begins working on August 24 and makes an IRWE payment on August 31, but does not receive his first paycheck until September 7; the IRWE is deducted from earned income received in September.
E. Procedure for IRWE payments made after work stopped
In most instances a person is working and receives earned income in the month in which an IRWE is both incurred and paid. Therefore, the payment amount is directly deductible from earned income received in the month of work activity. In unusual situations, however, the payment of an IRWE may not correspond to either a month of work activity, or a month in which earned income is received, or both. Specific limitations apply to the deduction of such payments from earned income in SSI cases.
1. Procedure for SGA determinations
A person with a disability may require an item or service in the month he or she begins working, but is no longer working in the following month when payment for the item or service is made. Under the regular rules, the payment is not deductible for SGA purposes because the payment is not made in a month of work. However, this is an exception to the regular rules. In order not to penalize the person, the payment is deducted in the last month the person performs SGA.
2. Procedure for determining countable earned income
a. IRWE payment made after earned income received and after work stopped
If a person with a disability receiving SSI makes an IRWE payment in the month after he or she last works and receives earned income, and the payment is for an impairment-related item or service used while working, deduct the payment amount from the earned income received in the last month of work.
Example:
A person with a disability receives a service necessary to enable him to work on April 3; he stops working on April 14, receives his last paycheck on April 28, and pays for the service on May 2; the IRWE is deducted from earned income received in April.
b. IRWE payment made and earned income received after work stops
If a person with a disability receiving SSI is no longer working but receives earned income and makes an IRWE payment, deduct the payment amount from earned income in the month of nonwork only if:
* the income received is for work activity (e.g., not income received as a silent partner in a business), and,
* the work activity is performed in a period when the person requires the impairment-related item or service.
EXAMPLE:
A person with a disability uses an impairment-related item for work throughout January but stops working on January 26. On February 9 he receives his last paycheck for January employment and that same day pays the bill for the item used in January. The IRWE amount is deducted from earned income received in February.
F. Procedure for proration of expenses for attendant care
In many cases the attendant may perform services that are not allowable under SSA's definition of attendant care services (per DI 10520.010D). Therefore, the total amount paid to the attendant each month is not deductible. Only deduct the amount which covers those services related to assisting the person to prepare for work, getting the person to and from work, helping the person on the job, and assisting the person immediately upon returning home from work. In order to determine the amount that is deductible as an IRWE for attendant care services, prorate the attendant's earnings as follows:
* Determine the number of hours the attendant spends each day in providing the specified allowable services.
* Divide the attendant's monthly earnings by the total number of hours worked in a month (or divide the weekly earnings by the number of hours worked in a week) to determine the hourly wage.
* Multiply the number of allowable attendant care hours by the hourly wage to arrive at daily attendant care expenses.
* Multiply the amount of allowable daily attendant care expenses by the number of workdays in the month to determine the deductible expense for attendant care services for the month.
G. Procedure for use of modified vehicles
1. Modification
Where structural or operational modifications are made to a vehicle without which the person could not get to and from work, the actual cost of the modification (but not the cost of the vehicle) is deductible if paid by the person. For example: a handbrake is specially installed on an automobile for a person whose impairment involves the legs, or an electric lift is added to a van for a person who uses a wheelchair.
2. Operating costs
In addition to the cost of modification, the operating costs of a modified vehicle that are directly related to work (and for travel to and from place of employment) are also deductible. For the purpose of IRWE, the determination of operating costs of a vehicle in the past was based upon the vehicle class and on a mileage rate corresponding to that class. Operating costs were based on data compiled by the Federal Highway Administration in their publication, Cost of Owning Operating Automobiles, Vans Light Trucks. However, this data was last published in April 1992. Therefore, we are phasing out the use of vehicle class mileage rates and replacing them with the standard mileage rate permitted by IRS for non-governmental business use.
a. IRS standard mileage rate
Use the IRS standard mileage rate in determining the mileage expense for IRWE purposes unless the vehicle class mileage rate in DI 10520.030G.2.b. is more advantageous to the beneficiary. Be sure to use the mileage rate in effect for the time period that the vehicle was actually used for travel.
IRS STANDARD MILEAGE RATE
Year - Cents Per Mile
2018 — 54.5
2017 — 53.5 (2017 rate lower that 2016)
2016 — 54 (2016 rate lower than 2015)
2015 — 57.5
2014 — 56
2013 — 56.5
2012 — 55.5
2011 — 51.0
2010 — 50.0 (2010 rate lower than 2009)
2009 — 55.0
2008 — 50.5
2007 — 48.5
2006 — 44.5
9/01/05 to 12/31/05 — 48.5 (temporary increase)
2005 — 40.5
2004 — 37.5
2003 — 36.0 (2003 rate lower than 2002)
2002 — 36.5
2001 — 34.5
2000 — 32.5
b. Vehicle class mileage rate
Use the vehicle class mileage rate only if it is more advantageous to the beneficiary than the IRS standard mileage rate.
VEHICLE CLASS
MILEAGE RATE
(Cents per mile)
Compact
29.5
Intermediate
33.4
Full-sized car
37.9
Compact pickup
30.6
Full-sized pickup
35.1
Minivan
35.3
Full-sized van
44.8
NOTE: If the vehicle classification is not known and cannot be obtained from the person, from specification literature received with the vehicle, from a local dealer for that particular make of vehicle, or from any other reliable source, use the IRS standard mileage rate in DI 10520.030G.2.a.
3. Determining monthly cost
Determine the daily mileage to and from work. Multiply that by the appropriate mileage rate to obtain the daily mileage cost. Multiply the daily mileage cost by number of days worked per month to obtain the monthly amount.
H. Procedure for other transportation situations
A person with a disability may have a deductible transportation expense when a physician or health care provider (or VR counselor, when appropriate) verifies that the person requires a special means of travel to and from work because of his/her impairment(s). Evaluation of these transportation costs must be based on two factors: the availability of public transportation in the person's community, and the person's capacity to drive a vehicle to work. Public transportation here means standard public forms of transit, e.g., bus, subway, or train, designed for use by the general public. To deal with these issues, first identify if public transportation is available for the person’s use. Available means it is in reasonable proximity to the individual’s place of work and that it runs when the person needs it.
EXAMPLE 1: A person works 9:00 p.m. to 3:00 a.m. A public bus runs until 11:00 p.m. and then stops until 5:00 a.m. the next morning. Although this person could take the bus to work, he would not be able to take the bus home. In this situation, public transportation is not available for this person’s use.
EXAMPLE 2: A person lives in a neighborhood where there is continual bus service. However, her place of work is not within walking distance of a bus stop. Public transportation is not available for her.
1. Public transportation is available
a. Person can use public transportation
If the person’s impairment(s) does not prevent him/her from getting to and from work or traveling on public transit, his or her transportation expenses may not be deducted as IRWE.
b. Person cannot use public transportation
When a person cannot use public transportation because of a physical or mental limitation resulting from the impairment(s) the operating cost of driving him or herself in an unmodified vehicle to and from work can be deducted at a per mile rate when need and payment are verified.
EXAMPLES:
* person uses wheelchair and public transportation is not equipped for wheelchair use;
* person cannot manage getting on and off public transportation (e.g., impairment prohibits travel from home to bus stop);
* person uses a service animal not permitted on public transit, or person is not mobility-trained in use of public transportation;
* the nature of impairment precludes travel on public transportation (e.g., person with respiratory illness requires special air-treated environment);
* person cannot negotiate public transportation (e.g., transfers, directions, and schedules) due to the nature of his/her impairment(s).
When a person cannot use public transportation because of a physical or mental limitation resulting from the impairment(s) and cannot drive him or herself in an unmodified vehicle, the following travel expenses may be deducted when need and payment are verified.
* the cost of a trip to and from work by taxicab or ride-sharing services; or
* the cost of paying another person to drive the person with a disability to and from work; or
* the cost of paying paratransit, a special bus, or other types of transportation.
NOTE: If the person with a disability is driven to and from work in his or her own vehicle, the vehicle operating costs (at a per mile rate) are deductible, in addition to any reasonable amount paid to the driver. If the driver is a family member, development must also include the requirements in DI 10520.025C.3. before IRWE is approved.
2. Public transportation is not available
a. Person Is Able To Drive An Unmodified Vehicle To Work
If the person’s impairment does not prevent driving and he or she is able to drive an unmodified vehicle to work, expenses of driving the unmodified vehicle may not be deducted as IRWE.
b. Person is unable to drive an unmodified vehicle to work
If the person is unable to drive an unmodified vehicle to work due to the nature of his or her impairment(s) and not simply because he or she is not licensed to drive, the following travel expenses may be deducted when need and payment are verified.
* the cost of a trip to and from work by taxicab; or
* the cost of a trip to and from work by taxicab or ride-sharing services; or
* the cost of paying another person to drive the person with a disability to and from work.
NOTE: If the person with a disability is driven to and from work in his or her own vehicle, the vehicle operating costs (at a per mile rate) are deductible, in addition to any reasonable amount paid to the driver. If the driver is a family member, development must verify payment in cash or by check for the service rendered (see DI 10520.025C.3.).

POMS Reference

DI 10520.030: Determining When IRWE Are Deductible and How They Are Distributed