A How to Apply the Impairment Related Work Expense (IRWE) Deduction

Program	Manual Section
ALTCS-Acute SSI-MAO MSP FTW	MA609

 

Procedures

1) Applying Deduction

Deduct IRWE from earned income after subtracting any unused portion of the general deduction and the $65 earned income deduction but prior to deducting ½ of the remaining earned income.

2) Deduction for Payment for Services

Deduct the payment for services if the services are received in a month that the customer is working. This includes any of the following:

• The customer must leave work temporarily to receive the services (he or she is still considered to be working).

• Payment is made in the month earned income is received and the earned income is for work done in the month the services are received.

• Employment begins and payment for services is made before the month earned income is received;

3) Payment for Deductible Items

Deduct payment for deductible items (regardless of when the item was acquired) if payment is made in a month the recipient of such an item is working.

Allow the deduction if payment is made in the month earned income is received and the earned income is for work done in the month the item is used.

• If employment begins and a payment for a deductible item is made before the month earned income is received, the payment is deductible;

• If a payment for a deductible item is made after employment stops, and the payment is made in the same month in which earned income is received for work done in the month the item was used, the payment is deductible.

Payment for a deductible item made in any of the 11 months before the month work begins may be deductible:

NOTE     Either the entire amount of the deduction may be applied to the first month of work, or it may be prorated over a 12 consecutive month period beginning with the first month of work, whichever the customer selects.

If…	Then…
The item is paid for in full during these 11 months	Prorate the payment over the 12 consecutive month period beginning with the month of the first payment. NOTE     The only portion of the payment which is actually deductible from earned income is the portion prorated to the month work begins and any following months.
Installment payments (including a down payment) are made for a particular item during these 11 months.	Total the payments and consider the payments to have been made in the month of the first payment. The sum of all payments made is prorated over the 12 consecutive month period beginning with the month of the first payment (but never earlier than 11 months before the month work began). Only that portion of the total which is deductible is the portion prorated to the month work began and the following months.