SI 00820: Earned Income
TN 46 (06-08)
Citations:
Social Security Act, section 1612;
20 CFR 404,1058, 404,1059, 416,1110, 416,1111.
A. Policy – When Payments are Wages or Unearned Income
1. Wages
Wages may include the value of the food, clothing, shelter, or other items received in lieu of cash.
NOTE: The value of clothing is considered wages if it meets the Title II definition of wages (see Wages Defined, RS 01401.005).
2. In-Kind Payments as Unearned Income
Generally, in-kind remuneration of food, clothing or shelter for employment is earned income (i.e., wages or self-employment income). However, in-kind payments of food or shelter to the following people, or under the following conditions, is unearned income:
Certain agricultural employees (see RS 01402.020);
Domestic employees;
Service not in the course of the employer's trade or business;
Service by certain home workers;
Members of the Uniformed Services; and
Provided on the employer's business premises, for the employer's convenience, and in the case of shelter received, its acceptance by the employee is a condition of employment.
B. Procedure — Development and Documentation
1. Development and documentation when food/shelter is provided
Use the following chart to develop and document whether payments of food and/or shelter are in-kind support and maintenance (ISM).
IF food and/or shelter is provided... |
THEN develop, document, and charge as... |
|---|---|
to a domestic employee |
ISM per (SI 00835.390 and RS 01402.216). |
for service not in the course of the employer's trade or business |
ISM per (SI 00835.390 and RS 01402.270). |
for service by certain home workers |
ISM per (SI 00835.390 and RS 01402.230). |
to a member of the Uniformed Services |
ISM per (SI 00830.540 and RS 01401.260). |
2. Development and documentation when food, clothing and/or shelter is provided
Use the following chart to develop and document whether payments of food, clothing and/or shelter are wages or if food and/or shelter is ISM or wages.
IF food, clothing and/or shelter is provided... |
THEN develop, document, and charge as... |
to an agricultural employee |
ISM or wages per (SI 00835.390 and RS 01402.020 - RS 01402.025). |
as remuneration for services performed in a sheltered workshop or work activities center |
ISM or wages per (SI 00820.300 and RS 02101.270). |
to members of religious orders who have taken a vow of poverty |
ISM or wages per (SI 00810.700 and RS 01901.620). |
C. Procedure — Situations Other Than Those Listed In SI 00820.010B.
If food, clothing and/or shelter is provided under circumstances other than those listed in (SI 00820.010B), use the following chart to determine how much and what type of income is chargeable.
When shelter is received for services rendered by a household member other than the claimant/recipient, see (SI 00835.390C.1.).
STEP |
ACTION |
|---|---|
1 |
Has a wage determination been made on this issue for Title II purposes, or does an FO precedent exist for this employer? If yes, go to Step 2. If no, go to Step 3. |
2 |
Document the Title II wage determination on EVID, or a MSSICS DROC screen and lock it. For non MSSICS situations, document on an SSA-5002 (Report of Contact) and fax it into the Non-Disability Repository (NDRED) or the Certified Electronic Folder (CEF), as appropriate, and, Charge the appropriate income. STOP. |
3 |
Ask the employer whether the food and/or shelter is furnished for his/her convenience, on his/her premises, and, in the case of shelter, as a condition of employment. If yes to all, go to Step 4. If no to any, go to Step 5. REMINDER: If an employer/employee (ER/EE) relationship has not yet been established, but it appears that food and/or shelter is furnished for the “employer's convenience,” determine if, in fact, the latter is true before developing the ER/EE relationship. If it is, do not develop for an ER/EE relationship unless additional remuneration is involved. |
|
Determine the value of the food and/or shelter as ISM (unearned income) subject to the presumed maximum value (PMV) rules in (SI 00835.300) and charge the income. (Food provided by an employer may be ISM to one person or outside the household ISM; shelter provided by an employer is always outside ISM (For more information related to computing ISM in employment situations see SI 00835.350).) NOTE: Effective March 9, 2005, clothing can never be ISM. Go to Step 6. |
|
5 |
Charge the current market value (CMV) of the food, clothing and/or shelter as wages. Go to Step 6. |
6 |
Document the employer’s statement and the basis for the determination on EVID, or a MSSICS DROC screen and lock it. For non MSSICS situations document the employer’s statement on a SSA-5002, and fax it into NDRED or the CEF, as appropriate. |
D. Examples – Remuneration as wages or ISM
1. Remuneration Is Not Wages
Mr. Robert C. Kemp is employed by a computer firm that maintains a cafeteria on its premises where employees can obtain a free meal during working hours. Mr. Kemp states that he eats lunch in the cafeteria 10 days per month and that the meals are worth $6 each. The field office (FO) contacts the employer and learns that the company:
furnishes the meals in order to have a substantial number of employees available for emergencies,
often calls on employees to perform services during the meal period, and
does not require all of the employees to remain on premises, but most of them do.
Since the meals are furnished for the employer's convenience and on his business premises, their value is unearned income. The FO documents the employer’s statements on a MSSICS DROC screen and locks it (EVID could have also been used) along with the reason that the value of the food is considered ISM. The FO charges Mr. Kemp with $60 per month ISM.
2. Remuneration Is Wages
Mrs. Beverly Webster, an SSI recipient, manages an apartment complex. In addition to her salary of $800 per month, she receives the free use of an apartment where she lives with her two children. The FO contacts the owner of the complex and learns that he:
furnishes the apartment to Mrs. Webster so that she will be available for emergencies,
would expect Mrs. Webster to respond to emergencies during her off-duty hours,
does not require Mrs. Webster to live in the apartment provided, but would not have hired someone who lived more than 2-3 miles away, and
rents apartments similar to Mrs. Webster's for $500 per month.
Since the shelter was not a condition of employment, the FO charges the current market value of the shelter as wages. Adding to it Mrs. Webster's salary of $800 per month, the FO charges $1,300 per month earned income. The FO also documents the owner’s statements and the basis for the wage determination on a MSSICS DROC screen and locks it (EVID could also have been used).
E. Reference
Employer Employee Relationships – General (RS 02101.005)
Wages Defined (RS 01401.005)