possibly dumb federal benefits question

[Morgana]

I wonder if anyone knows the answer to this or even knows how, specifically, I could look it up.
So I have Social Security and I still work part time. The income from the paycheck work fluctuates wildly.
I happened to stumble onto a slim chance at a really cool housing possibility. But to qualify I would have to meet HUD income limits. My 2022 income was just a nano-hair over the cap. My 2023 income will be well below it. In 2024 who knows. I'm freelance, and clients are hard to manage, as any freelancer knows -- it's not like I have some dream boss who I can tell "just give me x hours this month."
So my question is ... if I get to December 2024 and realize I'm $499 over the income cap and I donate $500 to a registered charity, will that safely put me back below the cap, or do they calculate all that some other way?
It's cool enough and cheap enough that it would be worth doing something like that if it was straightforward, but not if it was a squishy grey area.
No reason anyone here /should/ know, but if someone does, please do share!
Thanks.

 

[VanFan]

So my question is ... if I get to December 2024 and realize I'm $499 over the income cap and I donate $500 to a registered charity, will that safely put me back below the cap, or do they calculate all that some other way?
It's cool enough and cheap enough that it would be worth doing something like that if it was straightforward, but not if it was a squishy grey area.
No reason anyone here /should/ know, but if someone does, please do share!
Thanks.

I'm no expert, but my thinking is that a charitable contribution reduces your Federal income tax liability if you itemize rather than taking the standard deduction. So, it could reduce your taxable income, but not your income.

Your question is a good one, and I hope you can find an answer about how the peaks and valleys/feasts or famines impact eligibility for various programs.

 

[Morgana]

I'll look into it more closely but dang I bet you're right. Thanks for reality check!

 

[Tony's Dream]

Go to the IRS website and you can find common questions. Some types of charity deductions may not impact your federal but will on your state and vice/versa. I rarely claim this deduction but I know it does reduce your taxable income.....not sure if it's dollar for dollar or a percentage. Do you use any tax preparation software? We have used turbo tax for years and it does great explaining deductions.

 

[tx2sturgis]

I would suggest setting up a self-directed IRA and then contributing into that IRA to reduce your taxable income.

That is legal and you can fund that IRA even into the next calendar year, before April 15 or whenever you do your taxes.

What I dont know is if the program you are referring to will look at that IRA account as a countable resource.

Do your homework on that and please let us know what you find out.

 

[Morgana]

Thanks for the suggestions, all! The more I look at this, the more impractical it is looking. I never qualify for subsidized housing (nor should I probably) -- somehow in the battle between wishful thinking and math skills, the wishful thinking won and I thought I had found a windfall. Now back on planet earth. Thanks for helping me think it through!

 

[maki2]

You most certainly can control your income as a freelancer. Just turn down jobs when you approach the upper limit of income qualification for poverty benefits such as subsidized housing and other programs.

 

[Gr8ful]

I'dcall a local tax preparer now & ask the question.

 

[Morgana]

You most certainly can control your income as a freelancer. Just turn down jobs when you approach the upper limit of income qualification for poverty benefits such as subsidized housing and other programs

Completely untrue in my world. Way too many client-management complexities. Turning down work is a tricky business that has to be handled carefully.

 

[Morgana]

I'd call a local tax preparer now & ask the question

That's what I was thinking when I started this thread, too. But I've come round to thinking that, as suggested upthread, taxable income and income qualifying for federal programs are probably two different things.
In this case, the thing would have been attractive if it had worked smoothly, it was not so much a thing I'd go to the mat for and try every angle to solve. It just had a few too many moving parts. Dang, it was a fun fantasy for a few days though
Thanks again all!

 

[maki2]

Completely untrue in my world. Way too many client-management complexities. Turning down work is a tricky business that has to be handled carefully.

Then it is what it is. You make too much while at the same time making too little. That has always been the fate of the “working class poor”.

 

[Gr8ful]

One more idea is many area's have senior centers with people trained in areas like this. Just a thought!

 

[t001tom]

I can think of 2 ways to reduce your income. First you take off expenses

I'm freelance, and clients are hard to manage, as any freelancer knows -- it's not like I have some dream boss who I can tell "just give me x hours this month."
So my question is ... if I get to December 2024 and realize I'm $499 over the income cap an

I can think of 2 ways to reduce your income. First you take off expenses before taxable income, so when you see what you need to spend to bring income down, buy supples, or small items that are needed. You do not have to capitalize every small tool, but can have a policy that anything under a certain amount will be expensed, if you need something like a small printer ect buy them before the end of the tax year. You could also consider incorporating. That gives many opportunities. If you are an employee, you can still charge off expenses like supplies and the dedicated home office. You will of course have to understand the rules. I am not talking about unreasonable purchases. Every worker has things they could reasonably justify.
Wish you well

 

[t001tom]

I wonder if anyone knows the answer t

You should be sure what hud calls income. As an example, my county has a senior property tax reduction, but it has income limits. I filed for homestead exemption and told the clerk i made too much for senior exemption. Later i had to take a copy of my tax return somewhere, and decided just for kicks to also take it buy the courthouse. The clerk looked at it and said i qualified. Apparently they use net income after exemptions ect, even though everything i read, said just income and not this detail. Keep in mind, If you inquire locally, the hud clerk may not be familiar with your work situation enough to give an accurate answer.

 

[dandiff]

If you're self-employed, typically, you get paid after you bill your client. You could choose to bill your client later than normal, such as, in January. Then recognize that income next year instead of this year. You just want to make sure that your clients isn't going to include that income on the 1099 they submit to the IRS in your behalf.

Also, I would look at the HUD application and figure out what types of income are included in their requirements. Figure out if it's total income, or net income.

If it's total income, any income you make will be included in the calculation.

If it's net income, paying some expenses early could help.