HUD Handbook 4350.3 § 5-1
Introduction (HUD Occupancy Handbook 4350.3 REV-1 CHG-4)
Operative Text
A. Owners must determine the amount of a family’s income before the family is
allowed to move into assisted housing and at least annually thereafter. The
amount of assistance paid on behalf of the family is calculated using the family’s
annual income less allowable deductions. HUD program regulations specify the
types and amounts of income and deductions to be included in the calculation of
annual and adjusted income.
B. Although the definitions of annual and adjusted income used for the programs
covered in this handbook have some similarities with rules used by the U.S.
Internal Revenue Service (IRS), the tax rules are different from the HUD program
rules.
C. The most frequent errors encountered in reviews of annual and adjusted income
determinations in tenant files fall in three categories:
1. Applicants and tenants failing to fully disclose income information;
2. Errors in identifying required income exclusions; and
3. Incorrect calculations of deductions, often the result of failure to obtain
third-party verification.
Careful interviewing and thorough verification can minimize the occurrence of
these errors.
D. Chapter 5 is organized as follows:
Section 1: Determining Annual Income discusses the requirements
regarding annual income and the procedure for calculating a family’s annual
income when determining eligibility. This section also includes guidance on
determining income from assets.
Section 2: Determining Adjusted Income describes the procedures and
requirements for determining adjusted income based on allowable
deductions.
Section 3: Verification presents the requirements for verifying information
provided by applicants and tenants related to their eligibility.
Section 4: Calculating Tenant Rent discusses the methods for calculating
the tenant’s portion of rent under the different programs covered by this
handbook.HUD Handbook 4350.3 REV-1 CHG-4 § 5-1 establishes the foundational framework for how income is determined in HUD-assisted housing programs. Before a family moves in, and at least once a year afterward, the household's income must be calculated using HUD-specific rules to determine the appropriate level of rental assistance. These rules differ from IRS tax definitions, and the chapter is organized into four sections covering annual income, adjusted income, verification, and rent calculation.
Plain English — not legal advice.
Under HUD Handbook 4350.3 REV-1 CHG-4 § 5-1, compliant operators conduct income determinations at move-in and no less than annually for every assisted household, applying HUD program rules rather than IRS tax definitions. Operators generally conduct thorough interviews and obtain third-party verification to reduce the three most common error types: incomplete income disclosure, missed income exclusions, and miscalculated deductions. Maintaining well-documented tenant files that follow the four-section structure of Chapter 5 supports accurate assistance calculations and audit readiness.
General guidance for property managers — not legal advice for your specific situation. Consult an attorney for advice on your case.
HUD Handbook 4350.3 REV-1 CHG-4 § 5-1 outlines a tenant's right to have their assistance amount calculated according to HUD's own income rules, which are distinct from IRS tax rules and may treat certain income sources differently. Tenants in HUD-assisted housing are generally asked to fully disclose income information at move-in and at each annual recertification, and the amount of assistance paid on their behalf is tied directly to that calculation. Tenants who believe an income determination was made in error may raise the issue with their property's management, consult a local tenant-rights organization, or contact the U.S. Department of Housing and Urban Development for guidance on applicable program rules.
General guidance for tenants — not legal advice for your specific situation. Consult a tenant-rights organization or attorney for advice on your case.
Generated September 25, 2026 — auto-generated, not yet human-reviewed. See /transparency for methodology.
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