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Guide for Completing Form 8823 - page 38 / 197

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38 / 197

Example 2: Unborn Children

A household was originally income qualified based on the inclusion of an unborn child. Four months later, the pregnancy ended in miscarriage. It is not necessary to certify the remaining household as a new tenant at the time of the miscarriage. If the income of the remaining household members exceeds *140 percent of the income limit (170 percent in deep rent-skewed projects)* at the next income recertification, the Available Unit Rule is applicable.

Verifying Income and Assets

Owners must verify all known income and assets that affect eligibility. However, if the total assets for a household are $5,000 or less, the applicants may satisfy the asset requirement by signing a statement attesting to such fact. 14

Acceptable methods of verifying information include third party verifications, reviews of documents submitted by the tenant (such as check stubs), and tenant certifications made under penalties of perjury. 15

Third party contacts are preferred. Owners should obtain the tenant’s consent for the release of information before contacting third parties. Verification forms should be directly sent to and received from third parties. If third party contacts are by telephone or interview, the conversation should be documented in the tenant’s file and include all the information that would have been included in a written verification. The owner may obtain acceptable third party written verification by facsimile, e-mail, or Internet.

Owners can accept tenant-provided documents (e.g., pay stubs, Forms W-2, bank statements, etc.) when third party contacts are impossible or delayed, or third party verifications are not needed (e.g., birth certificates or divorce decrees). 16

There will be situations where it will be difficult to estimate income. For example, the tenant may work sporadically or seasonally. In such cases, owners are expected to make a reasonable judgment as to how to the most reliable approach to estimating what the tenant will receive in the coming year.

Determining Annual Income

Household income is defined as the gross income (with no adjustments or deductions) the household anticipates it will receive in the 12-month period following the effective date of the household’s certification of income.17 *If the household’s income cannot be determined based on current information because the household reports little to zero

14 15 16 See Rev. Proc. 94-65, 1994-2 C.B. 798. Treas. Reg. §§ 1.42-5(b)(vii) and 1.42-5(c)(1)(iii). Third party contacts are considered impossible if an employer does not respond, third party charges a fee, or no third party is available. Generally a third party contact is considered delayed if a response will not be received within two weeks, but can be less it is determined that the third party will not respond. As explained in Treas. Reg. §1.42-5(b)(vii), gross income for purposes IRC §42 is not gross income for purposes of determining a federal income tax liability. 17

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Revised October 2009

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