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Anticipated Income and Rideshare Drivers

Wednesday, March 25th, 2020

Written by Jennifer Robinson, Spectrum Enterprises

Nowadays, many of us have apps on our smartphones that allow us to, within seconds, hail a ride from our exact location to our desired destination using only our fingertips. The ridesharing industry exploded onto the scene and changed the way millions of people get from Point A to Point B. Individuals worldwide now have the opportunity to work for themselves from the comfort of their own vehicles, and this has had a major impact on the work we do.

For decades, self-employed applicants and/or residents were rare. The most common examples were hairdressers and barbers or those selling products like cosmetics or food storage containers from catalogue companies. With the rise of the “gig-economy” has come a significant increase in self-employed individuals. It is important to understand that rideshare drivers are not employees of the companies that own the apps/services, they are considered “self-employed partners.” Instead of the pay checks that regular employees receive with taxes withheld, they are responsible for paying their own taxes on the payments they receive. At year end they are issued a Form 1099 or 1099K instead of a W2, and they file a Schedule C with their tax returns.

The HUD Handbook instructs that income from a business is handled differently than pay from regular employment. Instead of using the gross income from pay checks (as with regular employees), the net income from a business is used to determine income for self-employed individuals. It is not required that third-party verification be obtained or attempted and a series of pay checks is not sufficient proof of income. Instead, the individual must provide proof of their gross receipts/income and expenses. Many agencies also require copies of tax returns and current year-to-date income and expenses.

So, what does this really look like for rideshare drivers? Drivers can access and print their complete history. Should we request every last detail, the payments and tips received for every single ride they’ve given since they started working this gig – NO! A million times NO! Keep it as simple as possible, minimize the amount of paper used, and make the whole scenario easy to follow for anyone who may later review the resident’s file. Let’s start with the basics.

What you need to know:

  1. When did this person start driving as a rideshare “self-employed partner”?
  2. Do they drive using more than one company/app?
  3. Since they started, did they stop for any substantial period of time?
    • If so, when and how long?
    • Is another pause or decline expected to repeat/continue? If so, why?

What documentation to request:

  1. A Self-Employment Income Affidavit
    • Completed by the individual and detailing dates active, past gross income and expenses, and estimated income and expenses for the next 12 months.
    • If driving for multiple companies, a separate affidavit for each.
  2. Tax Return(s) including Schedule(s) C
    • Recommended for at least 3 years
    • Or all years active if less than 3 years
    • And corresponding Form(s) 1099/1099K
  3. Monthly Print Outs of Ride Income
    • This is a summary of the month, not a ride-by-ride or weekly or daily breakdown (remember, we are attempting to reduce the amount of paper in your file and make this simple and clear).
    • If they have been driving for multiple years, Spectrum recommends monthly history for the current year to date and the previous year.
  4. Proof of Expenses
    • This is included on the Schedule C for previous years.
    • Receipts may be needed for current year if the income source is new and a full year’s tax return is not available.
    • Several ridesharing companies allow drivers to upload receipts, etc. to track their expenses along the way instead of having to keep separate records. The driver should be able to include this in their monthly summary if using this feature.

Remember it’s perfectly fine to tell someone they need to organize their shoebox of receipts into an organized format that you can follow, you are not their accountant and are not expected to act as one. That said, if they do have an accountant, a letter on letterhead from an accountant stating past, current, and expected future earnings can serve in place of actual receipts.

Remember, if they did not work in this field or for the same gig company for all of the previous year, the total net income on their tax return is not an exact estimation of what they will earn in the next 12 months. If they only drove for eight months in 2019, the amount from the tax return should at least be divided by eight and multiplied by twelve to represent a full year’s income. A more accurate approach would be to collect the monthly print outs from when they started through present to look for patterns, fluctuations, increases, etc.

Just as we were really starting to understand how to cope with this new form of income, the coronavirus (COVID-19) pandemic hit and it is important that we are aware of how this will impact our approach to determining income for rideshare drivers. It is not expected that the slow-downs will continue forever, using March-April 2020 income as a snapshot to represent the next 12 months is likely not accurate or appropriate.

In light of recent shutdowns and “social distancing”, it seems that income from this gig-economy source will need some additional analysis. As of March 17, 2020, Uber and Lyft have temporarily suspended their carpooling services (Pool and Shared) so that strangers cannot ride with one another in an attempt to flatten the curve of COVID-19. In large cities like New York and Seattle, this type of service was a substantial portion of several drivers’ fares.

Uber has reported as much as a 70% decline in trips in cities hardest hit by COVID-19. In an attempt to offset the income loss, several traditional rideshare drivers are turning to take-out food delivery services like DoorDash, Postmates, GrubHub, and UberEats. Don’t forget to ask about these.

It has always been important to analyze income and expenses related to self-employment, but the rise of the gig-economy has significantly increased the frequency of doing so in the LIHTC management and compliance industry. Don’t be afraid to ask for more information or documentation. If an applicant cannot provide enough organized detail, you may not be able to rent to them.


Friday, October 13th, 2017

October 13, 2017: The Social Security Administration has announced the Cost-of-Living Adjustment (COLA) for 2018.  According to www.ssa.gov:

“Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 66 million Americans will increase 2.0 percent in 2018.

The 2.0 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 61 million Social Security beneficiaries in January 2018. Increased payments to more than 8 million SSI beneficiaries will begin on December 29, 2017.”

You can add the 2.0% COLA by multiplying the current award amount by 1.020.

For management staff, be sure to apply this COLA to benefits for the appropriate number of months. 


Mrs. Smith would like to move in on December 1, 2017.  Her 2017 gross Social Security monthly amount is $928.  You will calculate her Social Security income as follows:

$928 x 1.020 = $946.56 (2018 monthly amount)

$928 x 1 = $928 (December 2017)

$946.56 x 11 = $10,412.16 (January – November 2018)

$928 + $10,412.16 = $11,340.16 (12 months)

If you have already processed files for move-in for January 2018, it is recommended that you review the household income and apply the COLA to benefits issued by the Social Security Administration since it is a known anticipated change in income.


A Few Tidbits from Wil at Spectrum

Thursday, October 15th, 2015

Written by Wil Whalen, Spectrum Enterprises

  1. There will be no cost-of-living (COLA) increase for Social Security this year. “With consumer prices down over the past year, monthly Social Security (SS) and Supplemental Security Income (SSI) benefits for nearly 65 million Americans will not automatically increase in 2016.” – ssa.gov  This means that managers will not be required to add an increased amount of SS or SSI to TICs this year.


  1. It’s always a good idea to compare a tenant’s first annual recertification file to the move-in file to see what has changed. This is particularly helpful when a tenant goes over the income limit at the first annual certification.  And if there are any changes in the file that would be cited by an auditor, place a clarification or note-to-file explaining the change.  It goes along with the old auditor adage, “If one page in a file raises a question, the next page should contain the answer.” 


  1. Calculation Sheets are your friends. One thing that makes my job easier as an auditor is when a file contains a calculation sheet.  This page is basically a summary sheet of all the calculation tapes in your file.  However, a common thing we find is instead of an actual calculation, we see is “Total x1 = Total.” ( ie: Employment – $31,200 x 1 = $31,200). As opposed to “Employment – $15 x 40 (hours) x 52 (weeks) = $31,200”.  This doesn’t show us your work or explain where you got your numbers.  Even if there is a calculation tape further on in the file, it’s helpful to show your work here as well.


  1. Winter is coming! According to the National Weather Service, El Nino is in full effect and it will be the strongest El Nino of the last 50 years.  This means good news for the Northeast – where I reside – and bad news for everywhere else!  California is expected to be much more active weather-wise this winter.  They will get significant precipitation in the form of both rain and snow.  This could result in mudslides and flooding, which is bad news for areas with recent burn scars from wildfires.  There will be less lake effect snow for the Great Lakes Region and a milder winter for the Northeast.  The Southeast can expect a much stormier winter than usual. They are expecting this to have a serious impact on weather throughout the all of North America, so pay close attention to your weather forecasts and plan accordingly.


  1. Flexibility is important on inspection/audit day. Keep in mind that most inspectors book multiple inspections/audits in one day.  In Massachusetts we do up to four or five smaller properties in a day.  We have a lot of ground to cover each quarter.  So this means we’re often running a few minutes late and even more often a few minutes early.  So be sure you provide your inspectors with good contact phone numbers so they can keep you updated on our status.  Also, it’s a good idea to give your inspectors information as to where they should park when they arrive.  This information can often be the difference between arriving on time and being late.  If they need to park in a public lot or garage blocks from the property, knowing this in advance will allow them to factor the time to park into their travel schedule.  We always do our best to be on time, but traffic and Mother Nature often work against us.  So being flexible on inspection day will make everyone’s lives a little easier.


  1. Happy Halloween.

Calculating For Additional Set Asides

Thursday, June 18th, 2015

Written by Jennifer Borland, Spectrum Enterprises

Many properties have included in the extended low income housing commitment set asides in addition to 40/60 or 20/50.  Most often Spectrum sees properties that include units set aside at 40%, 30%, 20%.  How are the income limits for these set asides calculated?

Given the 50% limits, determining additional set aside limits isn’t very hard:

40% = 50% x 0.8

30% = 50% x 0.6

20% = 50% x 0.4

Using limits for a property placed in service prior to 2009 in Portland, Maine:

            1 person           2 person           3 person          

50%     $27,300           $31,200           $35,100                      

            x     0.8            x     0.8            x     0.8

40%     $21,840           $24,960           $28,080


            1 person           2 person           3 person          

50%     $27,300           $31,200           $35,100                      

            x     0.6            x     0.6            x     0.6

30%     $16,380           $18,720           $21,060


            1 person           2 person           3 person          

50%     $27,300           $31,200           $35,100                      

            x     0.4            x     0.4            x     0.4

20%     $10,920           $12,480           $14,040

Spectrum recommends having your housing credit agency approve limits before implementing.

2015 HOME Limits

Monday, May 11th, 2015

HUD published the 2015 HOME income and rent limits on Friday. The go into effect on June 1, 2015.

Things to remember about HOME income and rent limits:

  1. There is no 45 day transition. You must begin using the new limits on the effective date;
  2. HOME limits are not “held harmless” like LIHTC limits. If HOME income limits go down, you must use the lower limits for both income and rent.

You can find the HOME limits either by following the link on our web site or directly at https://www.hudexchange.info/home/.

REMINDER – Check for Updated Compliance Forms

Friday, April 24th, 2015

Written by Erik Whitton, Spectrum Enterprises

A recent trend we are noting as we review tenant files is that many sites are using outdated forms.  Most state agencies provide forms such as Tenant Income Certifications (TIC), Income Verifications, and Affidavit forms.  While many of these forms are suggested; others are mandatory.  From time to time these forms are modified to reflect new rules or policies.  For example, the imputed asset rate changed in February 2015 which means most state agencies have updated their TIC forms to reflect the new rate. Other forms may have changed as well.  

Please make sure that properties in your portfolio are using the current version of all forms provided by your state agency.  Most state agencies maintain a website with all compliance materials such as forms, income/rent limits, and compliance manuals.  It is therefore very easy to compare the forms you are using with the current versions provided by the state agency.  Usually the forms have a date on the bottom of the form to indicate when they were  last updated.  

I would additionally suggest:

  • Reviewing any recent changes to your state compliance manual
  • Compare the income and rent limits in use at your sites with the figures provided by your state agency
  • See if the state is providing any compliance training seminars that you should participate in
  • See if you can subscribe to an email notification service to receive these types of updates

Please see our forms package here.

Tip Affidavits

Wednesday, April 1st, 2015

Written by Lois Churchill, Spectrum Enterprises

When a job pays tips, or can be reasonably expected to pay tips, the use of a Tip Affidavit is highly recommended.

Servers in restaurants have to report credit card tips but not cash tips, the same with taxi drivers.  Valet attendants don’t necessarily have to report any tip income but don’t be fooled into believing they don’t earn any. At the typical $1 per time I typically pay times the overall number of cars parked/retrieved in a shift, this can add up to some serious income!

Regardless of whether some tip income is reported on pay stubs, if the job is one in which tips are or could be earned obtain an affidavit to determine if there’s additional countable income.

Spectrum 2015 Reporting Format

Thursday, March 26th, 2015

Written by Wesley Chisholm, Spectrum Enterprises


Spectrum has recently completed an update to the reporting format we use for investor clients.  We have refined our reports to include more information, to improve the text quality for reading and printing, and to make it easier for property management staff to understand what corrections are needed.  It may take some time before you feel familiar with these reports as they are a departure from what our previous reports looked like.  However, I have spent a lot of time on this and I firmly believe these are an improvement for you and your partners.  Spectrum 2015 Sample Investor Report is available for review.

Going forward, all reports will consist of a cover letter along with the following items:

 Exhibit A: “File Results Based on Risk”

The primary concerns of our work relate to income eligibility, student eligibility, and rent restriction.  This exhibit lists all units sorted to show files with a highest risk of noncompliance first.  These files should be prioritized by management staff responsible for submitting corrections for re-review. The files with the least risk of noncompliance will be sorted to appear later in the report. The exhibit includes detailed notes from the Spectrum Compliance Analyst to list all issues of potential noncompliance along with suggested corrective action.

 Exhibit B: “File Results Sorted by Unit Number”

This exhibit is a streamlined listing of all files submitted for review.  Each file is sorted by Unit Number and the report can be compared to rent roll or year-end status reports prepared by the site.  Although the full text of our findings is not included here, the exhibit does include our file ratings.  Also listed is the tenant name; move in date; bedroom size; set aside election; income; rent; and utility allowance.  This exhibit includes a summary of unit mix (bedroom size and set aside elections) which can be compared to the property’s tax credit application filed with the HFA.

 Exhibit C: “Spectrum Review of Management Procedures”

In this exhibit we assess critical procedures related to the organizational structure of tenant files; how applicants are screened for eligibility; how income/assets are verified; whether the manager tests income using a variety of approaches; whether the correct income and rent limits are used; and whether the correct utility allowance is used.  Our Compliance Analyst will provide suggestions on any area that could be improved.

 Exhibit D: “Income and Rent Limits”

Spectrum performs an independent calculation of Section 42 income and rent limits.  Our data is included for your reference.


On the Exhibit A and Exhibit B reports our Compliance Analyst has summarized a risk rating for each file submitted.  The risk rating includes 2 elements.  The overall household/unit LIHTC eligibility is ranked as follows:

 Yes: Spectrum Analyst has confirmed the household/unit is eligible based on income; gross rent; and student status.

A: Spectrum Analyst believes the household/unit appears to be eligible based on income; gross rent; and student status.  Additional work is required to make a final determination.

?: Spectrum Analyst is questioning whether the household/unit is eligible based on income; gross rent; or student status.  Additional work is required to make a final determination.

No: Spectrum Analyst has confirmed the household/unit is not eligible based on violations related to income; gross rent; or student status.

 In addition to a determination of household/unit eligibility; our reports reflect a numerical rating to assess overall tenant file compliance and whether the manager should be required to submit additional corrective materials.  Here is an outline of the ratings criteria used:

Rating 3:  Household/unit is not LIHTC qualified.  File contains severe noncompliance which could result in loss of credit.  Please submit file corrections for re-review.

Rating 2:  File appears to contain at least one issue which may be reported to the IRS as noncompliance.  Please submit file corrections for re-review.

Rating 1:  Unit is qualified; file corrections are suggested however they do not need to be submitted for re-review.           

Rating 0:  Unit is qualified; file does not require corrective action.

2015 Income Limits

Tuesday, March 10th, 2015

Written by Lainey Nadeau, Spectrum Enterprises

HUD has announced the 2015 income limits for the MTSP housing programs effective March 6, 2015. This includes low income housing tax credits and tax exempt bond financing. HUD allows for a 45 day grace period, which means these limits must be in use by April 20, 2015. 

Our advice to all housing professionals is to immediately check for an increase for your sites.  If the income limits in your area have increased go back through any files denied over the past few months to see if any slightly over income households may qualify under the new limits.  

To find your 2015 income limits visit this site (and make sure to bookmark it!):





  • Choose FY2015 MTSP Income Limit Documentation System then click on the grey button on the next page.  
  • On the next page choose your state and then your county or city.



  • The result will look something like this:



Depending on the placed in service date for your project you will use either the HERA special limits (top chart) or the FY (Fiscal Year) limits on the bottom chart.  Or you could be held harmless to a prior year. 

HUD provides the 50% and 60% income limits. HUD does not provide rent limits or limits for lower set asides such as 40%.  Spectrum has created an Excel spreadsheet to accomplish this.  After you download the spreadsheet you can enter the placed in service date for your project; the State; the city/town/county; and then you enter the 50% income limits from the HUD page into the yellow shaded line in the spreadsheet.  Formulas written into the spreadsheet will calculate the 40% and 60% income limits along with all corresponding gross rent limits.

If you want to manually calculate your rent limits this is the formula:

  • 0BR: (1 person income limit x 0.3)/12
  • 1BR: (1.5 person income limit x 0.3)/12
    *1.5 person income limit = (1 person + 2 person)/2
  • 2BR: (3 person income limit x 0.3)/12
  • 3BR: (4.5 person income limit x 0.3)/12
    *4.5 person income limit = (4 person + 5 person)/2
  • 4BR: (6 person income limit x 0.3)/12

We frequently see properties using the incorrect income and rent limits.  There is a lot of confusion surrounding this. Fortunately there are many resources available to provide guidance.  

  • This blog (originally posted in December 2012) provides guidance on what to do if income limits in your area have decreased.  
  • This blog (originally posted in January 2013) provides good explanation on choosing the correct income limits based on the building placed in service date.
  • IRS newsletters #4748, and 50 all contain helpful guidance on how to correctly apply income limits.  

As a final note, we always suggest updating your utility allowances at the beginning of the year or when new income limits are published. If you are not sure how to determine the correct UA for your property please refer to Chapter 18 of the 8823 Guide.  

Retailers Pay Increases and Anticipated Income

Thursday, February 26th, 2015

Written by Lainey Nadeau, Spectrum Enterprises

In the last week two retail giants, Walmart and TJX Companies, have announced plans to increase pay for workers in 2015 and 2016. How does this affect the LIHTC program? Anticipated income.


On February 19 Walmart’s CEO Doug McMillon announced via blog a plan to increase pay for employees effective April 2015 with an additional increase to be effective in February 2016. Here are the details of the Walmart increase:

  • CURRENT ASSOCIATES: Pay will increase to at least $9/hour by April 2015 and to at least $10/hour by February 2016
  • NEW ASSOCIATES: Will start at $9/hour and increase to $10/hour after successful completion of a 6-month training program
  • DEPARTMENT MANAGERS: Some department managers will see pay increase to at least $13/hour this summer and  to at least $15/hour in early 2016  
  • SCHEDULING: Employees may have a more fixed schedule, more advanced notice of their schedule and more opportunity to pick up additional shifts. 

With 5,163 Walmart and Sam’s Club locations in the US there is likely one in or near your community. According to CNN this pay increase will impact roughly 500,000 full-time and part-time Walmart associates.


On February 25 TJX, the parent company of TJMaxx, Marshalls, Homegoods and Sierra Trading Post, announced plans to increase pay to at least $9/hour beginning in June 2015. In 2016 all workers will see their pay increase to at least $10/hour, (Bloomberg, Wall Street Journal). TJX Companies have over 3,200 stores worldwide with 191,000 employees.


Regarding anticipated income, the HUD 4350 states, “If information is available on changes expected to occur during the year, use that information to determine the total anticipated income from all known sources during the year,” (p. 5-4). Not including an anticipated raise could result in a finding of non-compliance. The 8823 Guide gives the following example:

Example 1: Specific Source of Income Omitted

Annual Income was not properly calculated. The manager/owner did not include a source of income, such as a raise, overtime, or bonus. When reviewed, a correct calculation indicates that the household was not income eligible at move-in. (page 4-33).

 Where the amount and date of the Walmart and TJX increases are known the increases should be applied to anticipated earnings.

 For current Walmart associates we know their pay will increase to at least $9/hour in April and to at least $10/hour in February 2016. For TJX employees we know their pay will increase to at least $9/hour in June 2015.  Spectrum is advising Property Managers to attempt 3rd party verification to determine if the applicant/tenant will be receiving an increase higher than the $9 & $10/hour. While Walmart & TJX use the Work Number for 3rd party verification we have seen some stores complete the EV. Property Managers may also be able verify over the phone or the applicant/tenant may have written documentation regarding their specific increase. The 8823 Guide states, “Owners should use due diligence by asking follow-up questions when the income certification process reveals unusual circumstances suggesting additional sources of income,” (p. 4-33). If the actual raise cannot be clarified the minimum increase to $9 and $10 should be used. To be conservative this should be applied effective April 1, 2015 & February 1, 2016 for Walmart employees and June 1, 2015 for TJX employees. 

 The date of the second increase at TJX increase has only been announced as “2016.” The statement from Walmart regarding department managers is also vague.  It says only that “some department managers” will see an increase in pay to $13 & $15 per hour and gives “this summer” and “early 2016” as the time frame. Spectrum does not feel that these alone are a known increase. Property Managers should exhibit due diligence by following up in these instances to determine if the applicant/tenant falls into the “some managers” category and if more specific increase dates are known.


Microsoft Word - walmart example

Ann is moving in to a LIHTC unit on 3/1/15. The manager has obtained a Work Number printout to verify her income at Walmart. The file documents attempts to 3rd party verify any additional increase via mail and phone. No additional information was available from Walmart or the applicant. The Work Number printout shows Ann is an associate who currently earns $7.50/hour.  When calculating her income you would use the current rate of pay for 4 weeks (3/1/15 to 4/1/15), the increase to $9/hour for 44 weeks (4/1/15 to 2/1/16) and the increase to $10/hour for the remaining 4 weeks.  The Date to Date Calculation at timeanddate.com is a useful tool.

Your company policy is to use the most recent 6 pay periods when calculating income. The average hours worked in the last 6 pay periods is 37.09 regular hours and 0.84 overtime hours.  You would calculate income in the following way:

 $7.50 x 37.09 x 4 = $1,112.70

$11.25 x 0.84 x 4 = $37.35

 $9 x 37.09 x 44 = $14,687.64

$13.50 x 0.84 x 44 = $498.96

$10 x 37.09 x 4 = $1,483.60
$15 x 0.84 x 4 = $50.40

Total: $17,871.10

 For Year To Date calculations or if gross earnings include shift differentials you may want to apply the % of the increase to the average.

 Average of 6 pay stubs = $287.50

$287.50 x 4 = $1,150
$287.50 x 1.2 = $345 (9/7.5=1.2)
$345 x 44 = $15,180
$345 x 1.11 = 414 (10/9 = 1.11)
$414 x 4 = $1,531.80

Total: $17,861.80

 The slight variation between the 2 calculation methods is based on rounding. I rounded to 2 decimals points for this example.

 Neither Walmart or TJX have addressed if increases will be given to current employees who already earn more than $9/hour.  Again, Property Managers should exhibit due diligence by following up in these instances.

 For new Walmart associates we know their starting pay will be $9/hour. Spectrum is advising Property Managers to apply the increase of $10/hour after 6 months with the assumption that the applicant/tenant will successfully complete the training program.

 The new Walmart scheduling system could be helpful when verifying income. Walmart employees will have access to their schedule for the upcoming 2.5 weeks. This may be especially helpful if someone has recently begun working or if their hours have recently changed. Property Managers will want to follow up with applicants/tenants to determine if they anticipate picking up more shifts as the new scheduling system will allow.

 The new Walmart plan also allows employees to begin contributing to their 401K on their 1st day of employment. Make sure you are verifying this as an asset and questioning if the employees have access to the asset.

 The statement from the Walmart CEO says that the company will continue to give quarterly bonuses to full and part time associates. Please make sure you are questioning bonuses and looking at historical data if available.

 In some states the minimum wage is already at or above the $9 amount. For more information about the minimum wage if your state please visit http://www.dol.gov/whd/minwage/america.htm

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