Article | Nonrecurring vs. Sporadic Income Part 1 | Nonrecurring

The nonrecurring income exclusion in the HOTMA rule replaced the former exclusion for "temporary, nonrecurring, and sporadic income (including gifts)." This provides a narrower definition of excluded income than the former broad exclusion. “Temporary” and “sporadic” income is thus now counted.

Nonrecurring Income

First, it is important to understand what is now excluded:, “nonrecurring income.” This can be organized into two main categories: 1) income specifically defined in the regulation as nonrecurring, and 2) income that has a discrete end date during the upcoming 12 months that then will not be repeated beyond the coming year.

Nonrecurring Income Type 1 | Income specifically defined in the regulation as nonrecurring. The HUD regulation provides some explicit examples of what is considered “nonrecurring” at 24 CFR § 5.609(b)(24). The list is not exhaustive:

• Payments from the U.S. Census Bureau for employment lasting no longer than 180 days, not culminating in permanent employment. However, it should be noted that any permanent employment with the U.S. Census Bureau should be considered in the annual income calculation.
• Direct federal or state economic stimulus payments. HUD will continue to advise PHAs/MFH Owners of which payments are considered economic stimulus or recovery payments for income calculation when these are released by the federal or state governments.
• Amounts directly received by the family as a result of state or federal refundable tax credits or state or federal tax refunds at the time they are received.
• Gifts for holidays, birthdays, or other significant life events or milestones (e.g., wedding, baby shower, or anniversary gifts).
  • Example | Mariah Smith received a check for $250 on her 25th birthday from her favorite aunt and $30 from her cousin. These gifts are excluded from annual income.
• In-kind donations (e.g., food, clothing, or toiletries received from a food bank or similar organization). When calculating annual income, PHAs/MFH Owners are prohibited from assigning monetary value to non-monetary in-kind donations received by the family from a food bank or similar organization. Non-recurring, non-monetary in-kind donations from friends and family may be excluded as non-recurring income. See (24 CFR § 5.609(b)(24)).
  • Example | Jonas Crandall receives a weekly basket from the local food bank that includes both food and toiletries. Because this is an in-kind donation from the local food bank, the PHA/MFH Owner must not include the basket items in the calculation of annual income.
• Lump-sum additions to net family assets (lottery winnings, contest winnings, etc.).
  • Example | Trevor Lucky bought 10 lottery tickets and discovered that one of the tickets won Trevor $1,000. Trevor reported his winnings. The PHA/MFH Owner determined that the lottery winnings are a one-time, lump-sum addition to net family assets and should not be included in the annual income calculation.

Nonrecurring Income Type 2 | Income that has a discrete end date and will not be repeated. HUD Notice 2023-10 section G.1 further explains what nonrecurring income is beyond the examples listed in the regulation. Income that has a discrete end date during the upcoming year and will not be repeated beyond the coming year is excluded from a family’s annual income as nonrecurring income.

For example, an increasing number of cities and states are piloting guaranteed income programs that have discrete beginning and end dates. This income can be excluded as nonrecurring in the final year of the pilot program. For example, for an annual reexamination effective 2/1/2024, guaranteed income that will be repeated periodically during the coming year but will end before the next reexamination on 2/1/2025 is fully excluded from annual income for the 2024 reexamination.

Income amounts excluded under this category may include, but are not limited to, nonrecurring payments made to the family or to a third party on behalf of the family to assist with utilities, eviction prevention, security deposits to secure housing, payments for participation in research studies depending on the duration, and general one-time payments received by or on behalf of the family.

Scenario: Justin Clark | Nonrecurring earned income excluded from annual income. Justin Clark worked for four months over the past year for a company that has since gone out of business. During the Clark family’s reexamination interview, the PHA/MFH Owner asks Justin whether he expects to work for the company again in the coming year. Justin provides proof that the company went out of business. The PHA/MFH Owner must exclude Justin’s earned income received from the company that went out of business from the family’s annual income.

Scenario: Lucretia Jones | Guaranteed Basic Income (GBI) excluded from annual income. Lucretia Jones reports at her upcoming annual reexamination, effective on 5/1/24, that her GBI program will be ending on 1/31/25. The PHA/MFH Owner excludes this income because the programs will stop before the next annual reexamination on 5/1/25. This income must be excluded, because there is a set term for the program, and the payments will not be repeated beyond the coming year, which is the final year of a GBI program.

Scenario: Lillian Gonzalez | Research stipend included, then excluded as annual income. Lillian Gonzalez reports at the annual reexamination that will be effective on 5/1/24 that she receives monthly payments for participation in a research project that is expected to last for 18 months and will end on 9/30/25. The PHA/MFH Owner includes this as income because the amounts will be received through the next annual reexamination on 5/1/25. For the 5/1/25 annual reexamination, the family provides a letter stating that the income will end on 9/30/25, so the PHA/MFH Owner will exclude the income received after the 5/1/25 annual reexamination.

FAQ 1 How does an owner/agent verify if income will be repeated in the coming year?

HUD Notice 2023-10 G.1 explains that “PHAs/MFH Owners may accept a self-certification from the family stating that the income will not be repeated in the coming year.”

FAQ 2 Unemployment documentation supplied by a family lists that the benefits can last a maximum of 26 weeks. As these will end during the coming year, are they nonrecurring?

No, these must be annualized and counted. HUD says in HUD Notice 2023-10 G.1 that nonrecurring income “does not include unemployment income and other types of periodic payments that are received at regular intervals (such as weekly, monthly, or yearly) for a period of greater than one year that can be extended.” Although it does not list what happens if the payments will last less than 12 months, it is the fact that it can be extended, and thus does not have a discrete end date, that makes unemployment ineligible to be considered nonrecurring.

What about “sporadic” income? Part 2 of this article will cover this topic.