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Effective: August 1, 2007 |
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20.15ar2 - Verification of Income (Archive) |
Archived: March 1, 2009 |
Verification is the process and evidence used to establish accuracy or completeness of information. All Minnesota Health Care Programs require verification of income.
The client is responsible for obtaining required verification. However, if the client is having difficulty in the process, help the client obtain the needed information. Require the client’s written consent to obtain verification from a third party.
For more information, see Verification Requirements.
MA for Employed Persons with Disabilities (MA-EPD).
MA-EPD Self-Employment Income.
MA-EPD Royalties, Honoraria and Stipends.
For all programs, require verification of earned and unearned income received by all household members in the 30 days before:
l Application.
l Renewal.
Examples of income verification are:
l Pay stubs.
l Employer’s statement.
l Tax forms.
l Copies of checks for unearned income.
l Award letters.
l Court orders.
l SVES Interface.
Note: The State Verification and Exchange System (SVES) is an interface for county workers to query on-line to the Social Security Administration. This interface is available in MAXIS. SVES provides the following:
n Verifies social security numbers in a monthly batch job.
n Serves as an input to initiate SDX, BENDEX, and BEER data exchanges.
n Inputs Interim Assistance Reimbursement (IAR) information.
n Serves as the vehicle for the current TPQY system used by workers to verify Title II (RSDI) and Title XVI (SSI) benefit information.
If the household submits a tax return as verification of any type of income, compare the information on the tax forms to the information reported on the application.
l If the tax forms do not accurately reflect the household's current situation:
n Contact the household to resolve the discrepancy.
n Request verification of the current income if it is from a different employer than shown on the tax forms or the amount on the tax forms is not reflective of current earnings.
l Examples of circumstances that may or may not result in a significant difference between tax forms and the household's current situation include but are not limited to:
n A wage earner has changed jobs.
n A wage earner has increased or decreased hours of employment.
n A self-employment enterprise has changed in size, nature, or scope.
n A wage earner who was previously employed seasonally has begun year-round employment.
n A source of unearned income has started or stopped.
Do not require the following for all programs:
l Additional verification if the client submits documentation which reflects reported earnings within the past 30 days.
Note: If the verification provided does not reflect current reported earnings, or no verification is provided, request verification of the past 30 days of earnings.
Example:
Mae submits her annual renewal. She includes her previous year's tax forms and W-2s. The W-2 for her current employer reflects five months of earnings consistent with her reported income.
Action:
Use the W-2 to determine Mae's earnings for the coming year. Do not require additional verification. If Mae did not have a W-2 from her current employer, you would request verification of the past 30 days of earnings.
l Separate verification of interest and dividend income that is identified on the household's tax forms, on bank statements, and other documents from the payment source.
Note: Also do not verify interest and dividend income based on the specific program when it is considered:
n MA/GAMC - excluded income.
n MinnesotaCare - unearned income.
l Verification of income at time of a reported change during the certification period. See Income Changes.
For all programs, except MA-EPD, there are several ways to verify self-employment income:
l Income tax forms.
l Business financial statement or detailed records of gross receipts and expenses.
l Business quarterly report (may be filed for tax purposes).
l Computer printout showing gross receipts and expenses.
l Signed statement from the business's accountant verifying projected business income or expenses.
See Self-Employment Income for more details on how to treat self-employment income and MA-EPD Self-Employment Income within this section.
For all programs accept the following verification of the seasonal income from seasonally employed people:
l Earnings for the most recent 30-day period in which the person was seasonally employed.
l The most recent year’s tax forms and W-2s.
l Other documentation reflecting the current seasonal earnings.
Follow General Provisions and the following policies for MinnesotaCare:
l Do not verify earnings of dependent children under age 19 who are students. See Dependent Child Income.
l Tax forms and W-2 statements are considered for MinnesotaCare purposes to be one verification. Both are needed to verify income.
Follow General Provisions and the following policies for MA and GAMC:
l Require verification of income received in each retroactive month for people requesting MA retroactive eligibility .
Exception: Self-employed clients requesting retroactive eligibility are not required to produce business documents showing actual income received in the retroactive months. Tax forms are acceptable unless they do not reflect accurate information for those months.
l Require verification of income received in a month for clients with a manual monthly spenddown.
Follow General Provisions and the following policies for MA-EPD:
Accept only the following forms of verification, in order of preference, for MA-EPD:
l Pay stubs. Be sure the pay stub includes:
n The employee's name or SSN.
n Hours worked.
n Gross pay.
n Social Security and Medicare taxes withheld.
n Net pay.
n Period covered by earnings.
n Employer's name.
l A completed Authorization for Release of Employment Information (DHS-2146).
Note: Require this form only if the employee does not provide pay stubs containing the required information.
One of the following must be provided as verification of earnings from self-employment:
l Federal tax forms if the client has been in business long enough to file taxes and was required to file federal income tax for the previous year.
Tax forms must include any of the following:
n Quarterly Schedule ES (Form 1040) Estimated Tax for Individuals, if they were required to pay quarterly self-employment taxes.
n Form 1040 U.S. Individual Income Tax Return with the "Self-Employment Tax" line completed.
n Schedule SE (Form 1040) Self-Employment Tax.
l Business records if the client has not been in business long enough to file a federal income tax return or quarterly estimated taxes.
Note: Advise the client to submit a copy of the federal tax return when it becomes available at the next renewal. Refer individuals to IRS Publication 533 (Self-employment Tax) for detailed requirements on paying estimated taxes.
Business records may include:
n Business financial statement.
n Detailed records of gross receipts and expenses.
n Business quarterly report.
n Computer printout showing gross receipts an expenses.
n Signed statement from the business’s accountant verifying projected business income or expenses.
MA-EPD Royalties, Honoraria, and Stipends
Documentation of royalty, honoraria or stipend income must show:
l The nature and amount of payments.
l Dates of payments.
l Frequency of payments.
l Social Security and Medicare tax withholding.
They can be verified with:
l Tax forms for the previous year identifying royalties, honoraria, or stipends with Medicare and Social Security taxes paid via entries on:
n Federal Tax Form 1040.
n Schedule C.
n Schedule SE.
n Form 1099- Misc.
l Pay stubs or written statement from the source of payment showing:
n Social Security and Medicare taxes withheld.
n Client’s name or Social Security Number.
n Amount of payment.
n Dates of payment.
n Name of the issuer.
l Quarterly Schedule ES (Form 1040) Estimated Tax for Individuals.
l Schedule SE (Form 1040) Self-Employment Tax.