Article | Nonrecurring vs. Sporadic Income Part 2 | Sporadic

As covered in part 1 of this article, 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. In part 1, “nonrecurring” was explored. Next, “temporary” and “sporadic” income must be understood.

Sporadic Income

Income that will not be repeated beyond the coming year (after the 12 months following the effective date of the certification), based on information provided by the family, is considered nonrecurring income and is excluded from annual income. However, income received as an independent contractor, day laborer, or seasonal worker is not excluded from income under HUD regulation 24 CFR §5.609(b)(24), even if the source, date, or amount of the income varies. It is “sporadic” but not excluded.

Scenario: Ana Johnson | Recurring earned income included in annual income. Ana Johnson works as an independent information technology (IT) contractor during various times of the year, when her clients require additional IT contract support. Ana reasonably believes she will be contracted again the following year based on discussions with her clients. The PHA/MFH Owner must include the income that Ana earns as an IT contractor in the family’s annual income.

Scenario: Logan 1 | One-time fundraiser [not income]. Logan fundraises $5,000 online to help pay for personal expenses with a “Go Fund Me” campaign. The PHA/MFH Owner verified with Logan that this was a one-time solicitation for cash donations and that Logan does not intend for this to be a recurring source of income. The $5,000 is a one-time lump-sum addition to net family assets and should not be included in the annual income calculation.

Scenario: Logan 2 | Multiple fundraisers [sporadic income]. At the next annual reexamination, the PHA/MFH Owner determines that Logan solicited donations online a second time and raised an additional $4,500. Again, Logan certified that he does not intend this to be a recurring source of income, but the PHA/MFH Owner can establish a recurring, though sporadic, pattern, and the $4,500 is not considered a lump-sum addition to net family assets and should be included in the annual income calculation.

FAQ 1 The above examples rely on direct manager observation over time. How does an owner/agent verify if income will be repeated in the coming year at the initial certification?

It is true that the above examples taken from HUD guidance rely on direct manager observation over time. Since it is difficult to establish a pattern of multiple fundings based on observation at initial certification, it is important to ask in the application process about the history of any income that may be sporadic and received more than once in the prior year. If any sporadic income is revealed by the family, it will be verified and counted. It can only be excluded if it can be documented that it cannot be repeated to be nonrecurring (see part 1).