Five Dos & Don'ts for Handling Alimony and Child Support

When certifying or recertifying households, you may encounter household members who get alimony or child support from ex-spouses or their children’s parents, or household members who pay alimony or child support to someone else. You need to know how to handle these payments correctly to calculate a household’s income. If you make a mistake and miscalculate household income, you could end up charging the household too much rent or HUD too much assistance.

The HUD Handbook has rules on handling alimony and child support payments properly [HUD Handbook 4350.3, par. 5-6]. Based on these rules, we’ll give you a few dos and don’ts to keep in mind when you calculate household income.

Count Alimony and Child Support as Household Income

If a household member gets alimony or child support, count these payments as part of household income. In many cases, the household member will get these payments directly from the ex-spouse or parent, or in some cases, from the ex-spouse’s or parent’s employer [HUD Handbook 4350.3, par. 5-6 (F)].

But sometimes household members who get some form of state welfare or grants get their child support payments through their state’s child support enforcement agency. This means the payments are included in their state welfare or grant payments, either as a lump sum or as a separate “pass through.” Make sure to include the amount of child support payments in household income, regardless of how you would treat the rest of the state welfare or grant payment. For example, sometimes households get money from the state for certain grants that HUD excludes from household income [HUD Handbook 4350.3, exhibit 5-1]. But if the state includes child support payments in the same check with these grant payments, you must separate the amount of child support from the remaining grant payment and include the child support in the household income.

Don’t Exclude Unpaid Alimony or Child Support Unless Household Member Made ‘Reasonable Efforts’ to Collect It

Some household members who are supposed to be getting alimony or child support payments may claim they aren’t getting some or all of the payments. Don’t be quick to exclude any unpaid amounts from household income. To get unpaid alimony or child support payments excluded from household income, a household member must first state in writing that she:

• Isn’t getting the payments that a divorce settlement, separation agreement, or other order requires; and
• Has made “reasonable efforts” to collect the amounts she’s supposed to be getting. HUD says this means she must have filed papers with a court or enforcement agency. It’s not enough that she, for example, wrote her ex-husband a letter threatening to go to court if he didn’t pay up.

Count Alimony or Child Support Wage Deductions as Income

Some household members who are required to pay alimony or child support don’t make the payments voluntarily. So a court may have ordered the household member’s wages “garnished,” meaning his employer must deduct the monthly child support payments from his wages and pay it directly to the child’s mother. The household may claim that you shouldn’t include these payments in his income from wages because the amount he actually gets paid is less than his stated salary. But in these cases, HUD says you must include these amounts in the member’s income from wages [HUD Handbook 4350.3, par. 5-10(F)].

Example: John Smith earns $1,000 a month at his job. He has $200 a month deducted from his wages by court order and paid to his child’s mother as child support, leaving a remaining $800 a month in wages. You must count the entire $1,000—not $800—when calculating John Smith’s household income.

Don’t Give Child Care Allowance for Nonresident Child’s Support Payments

Some household members who pay child support to a nonresident child may ask you to include these payments in their child care allowance and deduct them from household income. But HUD makes clear that child support payments for children who don’t live in the unit must not be included in a household’s child care allowance [HUD Handbook 4350.3, par. 5-10(F)].

Get Proper Verification

If a household member gets alimony or child support, verify the following information:

• The amount of alimony or child support specified in the divorce settlement or separation agreement; and
• Whether this amount will be terminated within the next 12 months, and if so, when?

To verify this information, the HUD Handbook specifies the following forms of documentation (in order of preference):

• A copy of a separation or settlement agreement or divorce decree stating the amount and type of support and payment schedules;
• A letter from the person paying the support;
• A copy of the latest check (be sure to record the date, amount, and number of the check for your files); or
• The household member’s notarized statement that she’s not getting required payments and has made “reasonable efforts” to collect unpaid amounts (when applicable).