Written by Mike Sprague, Spectrum Enterprises
Verifying 50% Custody of Minors for Income Eligibility
In order to be eligible for a tax credit unit, a household must be income eligible. Income eligibility is based on the income of the household compared to the max income allowed for a household of that size.
We sometimes see files where eligibility is questioned because the custody of minor children has not been adequately verified. An applicant must have at least 50% custody of a child in order to count that child as a household member and thus be eligible for the higher income limit. When an applicant needs the child in order to qualify, the manager must verify custody.
Paul applies for a LIHTC unit listing him and 6 year old daughter, Kate, as occupants. The verified income for this household is $25,000. The 1 person income limit is $28,860 and the 2 person limit is $32,940. There is no need to verify custody of the child in this example because Paul doesn’t need the child to be eligible as he meets the income requirements for a 1 person household.
Jasmine has applied for a LIHTC unit listing her and 3 year old son, Jackson, as occupants. In processing her application you verify her income to be $30,000. The 1 person income limit for the property is $28,860 and the 2 person limit is $32,940. When asked about the custody arrangements for her son, Jasmine states that she has him on weekends while his father has him during the week. This means that Jasmine has her son for less than 50% of the time. Since her income exceeds the 1 person limit, she is not eligible due to being over income.
Using the same example, now Jasmine states that Jackson’s father is not in the picture and she has full custody. In order to count this as an eligible 2 person household, you must obtain verification of custody.
There are a number of ways that custody can be verified.
Court Documents - If there was a hearing for a divorce, child support or custody then the court documents will detail which parent was awarded legal custody of the child. Read the documents carefully to determine what the outcome of the hearing was as the custody arrangements in some cases can get very specific. When using these documents, be sure to collect all pages for the file.
Tax Return – Per the 8823 Guide (page 4-3) to verify at least 50% custody, “determine which parent claimed the children as dependents for purposes of filing a federal income tax return.” On page 1 of the 1040 it lists all of the dependants that the tax payer is claiming. There is also a section on this page asking for the number of the children listed as dependants that lived with the tax payer. As with the court documents, be sure to collect all pages of the return for the file.
School Records – If the child is of school age, then info from the school showing the adult household member as the minor’s guardian of record would be sufficient to show that they have custody.
Social Services Agency – If applicable, 3rd party verification from a governmental social services agency (such as DHHS) regarding the placement of the minor within the household will verify custody.
Medical Records – If the child is too young for school and the other sources above are not available, then an alternative would be obtaining correspondence from the child’s doctor establishing the adult household member as the guardian of record.
Spectrum recommends using a Custody & Child Support Affidavit for instances where there is a joint custody situation. The form should be accompanied by any verification that is obtained. See this form for clarification.