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Verifying Income Using Current Tax
Documents for 2018
Introduction ..................................................................................................................................................... 1
Verifying Income using IRS Tax Forms used prior to 2018 .............................................................................. 1
Verifying Income using current IRS Tax Form 1040 ......................................................................................... 2
Verifying Deductions using current IRS Tax Form Schedule 1 (Form 1040) .................................................... 3
Verifying Self-Employment Income Using the current IRS Tax Form Schedule C ............................................ 4
Introduction
This document provides guidance on how to use IRS tax forms 1040, Schedule 1, and Schedule C to verify income. Forms 1040 and Schedule 1 are the main tax documents used to report income and deductions to the IRS and includes business income and loss if the individual is self-employed. Tax Form Schedule C is used to capture the details of the business income and expenses and to determine whether the business experienced a profit or loss in income. If other tax forms are submitted as verification of self-employment income, staff with a lead. Verifying Income using IRS Tax Forms used prior to 2018 For instructions on how to use IRS Tax Forms to verify income prior to 2018, which includes instructions for the 1040, 1040A, 1040EZ, and Schedule C, please use this link: Verifying Income
Using Tax Docs prior to 2018.docx.
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Verifying Income using IRS Tax Form 1040 for 2018
Screenshot of IRS Tax Form 1040
Step 1: Add all attested income (except for reported SSB/SSDI) from the case or application. Note: ONE calculates and displays a monthly amount on the Income Summary screen. Step 2: On the 1040, add together lines 1, 2a, 3b, 4b, and the amount written in on line 6 from Schedule 1, line 22. Divide the remaining amount by 12 to arrive at a monthly figure. This is considered the verification amount. Step 3: If the attested monthly income from Step 1 and the calculated verified amount from Step 2 are within $100 of one another, consider the attested amount verified. If the attested and verified amounts are discrepant by $100 or more, the attested income is not considered verified. Step 4: If the SSB/SSDI is countable, verify the reported SSB/SSDI using Social Security Data Screens. It is appropriate to enter the gross SSB/SSDI as verified on SSA screens, even if this results in ineligibility. Be sure to update the verification source accordingly.
Line 6 is total income
prior to any adjustments.
This is the addition of
lines 1-5 and any additional amount from
Schedule 1.
This is where to find additional
income copied over from
Schedule 1, line 22.
Line 5a is the total Social
Security Benefit received.
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Note: Under MAGI and MAGI-based methodology, the full Social Security benefit amount is countable unless the recipient of the benefits is a child living with a parent or a tax dependent living with their tax filer where special income exclusion rules apply. All of the SSB/SSD is either countable or all is excluded, even if only a portion of it is taxable. Verifying Deductions using IRS Tax Form Schedule 1 (Form 1040) for 2018
Screenshot of IRS Tax form Schedule 1 (1040)
Step 5: If attested deductions impact eligibility, the deductions must be verified. Add all attested deductions from the case or application. Note: ONE calculates and displays the monthly amount on the Deductions Summary screen. Step 6: The combined total of deductions is line 36 on the Schedule 1 (Form 1040) tax form. Divide by 12 to convert to a monthly amount. This is considered the verification amount.
Line 36 is the total amount
of deductions
This amount is included in
line 6 above on the 1040
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Step 7: Determine if the annualized deduction from the Schedule 1 (Form 1040) verifies self- attested deduction. If the attested monthly deduction and the calculated verified amount calculated from Step 6 are within $100 of one another, consider the attested monthly deduction verified. If the amounts are discrepant by $100 or more, the attested deduction is not considered verified. Verifying Self-Employment Income Using the IRS Tax Form Schedule C for 2018 Note: Not all self-employed individuals file a Schedule C to report their self-employment income. If an individual provides other documents to verify their self-employment income, staff with a lead.
Screenshot of IRS Tax Form Schedule C
Line 7 shows the total business
income before costs. Do not use the amount on this line as the verified income amount.
Line 31 is the net business
income. A loss will be shown with parentheses, i.e. $(200).
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Important: If both the IRS Tax Forms 1040 and Schedule C are submitted, follow the instructions in Verifying Income using IRS Tax Form 1040. If only the Schedule C was submitted, follow the guidance below. Step 1: Add the net self-employment income from the case or application. Note: If self-employment expenses were not entered on the Self-Employment screens, check the Deductions screen and case notes to confirm if self-employment expenses were captured as a deduction. The net self-employment income should be the gross self-employment income minus self-employment expenses. Step 2: On the Schedule C, the amount in the ͞Net profit or (loss)͟ (line 31) indicates net self- employment income. Divide that amount by 12. This is considered the verification amount. Note: If the business experienced a loss in income, there is no countable self- employment income. The amount reflected on line 31 will be displayed with a parenthesis to indicate the business loss. Step 3: If the attested monthly net self-employment income and the amount calculated from Step 2 are within $100 of one another, consider the attested self-employment income and expenses verified. If the amounts are discrepant by $100 or more, the self- employment income and expenses is not considered verified.quotesdbs_dbs20.pdfusesText_26
[PDF] Form 1040-C - Internal Revenue Service