Playing the “What if” Game
Teach long enough and certain classroom interactions become familiar. One of the most dependable is what I like to call the “What if” Game. For almost any rule, regulation, or guidance that is provided in a compliance course, there is a countless number of “What if” scenarios that can be proposed and discussed/debated ad infinitum. And for very obvious reasons, we trainers can only let these tangential musings go so far before we have to reign things back in.
However, I allow the game to run its course when a student has a genuine concern over a situation they have encountered at their property, or when there is a legitimately relevant question dealing with a current event or timely topic of concern. A recent class that I taught offered both of these scenarios.
The first was a situation where a student asked, What if a tenant worked as a contractor and received a per diem (or “per day”) reimbursement for travel expenses; did the reimbursement count toward the tenant’s income? My gut reaction to this was no, it should not be counted since HUD usually excludes out-of-pocket reimbursements from income. But in this business, gut reactions are usually not good enough so I decided to do additional research to find out for sure. In doing so, I knew that a contractor is considered to be self-employed and I knew that HUD has guidance in place for self-employed individuals or “Income from a Business” as discussed in HUD Handbook 4350.3 Rev-1, Paragraph 5-6H, page 5-11. It specifically states that “Net income is gross income less business expenses…” So that was a start, but I decided to take it further by checking in on how the IRS handles per diem for tax purposes and found that as long as it is within the approved federal rate it is excluded from gross income and not reported. In this case, I was happy to learn that my gut reaction was correct and that I was able to help the student with the proper guidance.
The second “what if” of merit that emerged from that same class concerned the five exceptions for full-time student households in LIHTC. A student asked whether or not same-sex couples would qualify for the exception that states that all household members are married and entitled to file a joint tax return. I thought this to be a very timely, thoughtful question, so again I felt some research was justified.
Currently, under the federal law — specifically the Defense of Marriage Act, or DOMA — married same-sex couples are not allowed to file joint tax returns for their federal income tax. However, in some states that recognize same-sex marriage, married same-sex couples may jointly file their state income taxes. Given that LIHTC is a federal program, I would lean toward saying the intention here is whether or not married couples are entitled to file federal income taxes jointly but there may also be some state agencies that have a broader interpretation and would say entitlement to file state income taxes is good enough to meet the exception. The bottom line here is that if you encounter this situation, check with your state agency to get their take on it.
As a final note, I want to clarify that I in no way want to discourage students from asking questions. In fact, some good creative thinking is often triggered from playing a little of the “What if” game and can lead to wonderful results in terms of how we manage our properties. Keep in mind that if you find yourself asking “what if” outside of the classroom, NCHM’s eHotline is available to those who are actively certified.