Will Getting A Big Tax Refund Make Me Lose My Benefits?
This year, you won’t have to worry about losing your benefits if you get a big tax refund. Starting in 2011, any tax refunds you get will not affect most public benefits, or how much you get!
Under the law passed in December 2010:
Any Federal Tax Refund (including the Earned Income Tax and Child Tax Credit) WILL NOT count as income in determining:
Eligibility or the Amount of Benefit you may get for any federally funded public benefit program. This includes state programs funded by federal money. So, if you get benefits under these programs, your tax refund will not be counted:
- TANF /ASPIRE /Parents as Scholars
- LIHEAP (fuel assistance)
- HUD and FmHA-subsidized housing (including Section 8 Voucher Choice)
- Alternative Aid
- Emergency Family Assistance.
The General Assistance program, run by cities and towns, does not get federal money. So your tax refund may affect your eligibility for GA. We advise that you use your refund money for “basic needs” and keep a record of those expenses before applying for GA after getting a refund.
This law also says that your tax refund money will not count against you as an “asset” for 12 months.For example, you cannot qualify for TANF unless your household’s “countable assets” are under $2,000. This new tax rule means that if your tax refund put your “countable assets” up over $2,000, you would have 12 months to spend that down before you could be disqualified. State TANF rules also allow you to save up to $10,000 in a "Family Development Account or Separate Identifiable Account.” This new tax rule would give you plenty of time (12 months) to set up such an account, or add money to it. If you are able to save, talk to DHHS or your nearest CAP agency about the rules for setting up such an account.
Learn more here:
Internal Revenue Service Fact Sheet (.pdf)