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Income Tax Refunds
Federal Tax Refunds
Federal tax credits and refunds are exempt as a resource for 12 months from the date of receipt. This exemption applies to both applicants and recipients. They are NOT considered as income.
State Tax Refunds
State Tax Refunds are considered property upon receipt, and must be evaluated as such. They are NOT considered as income.
Clients should be:
- Encouraged to apply for tax refunds, but cannot be discontinued if they fail to do so.
- Advised that their eligibility may be affected if they receive an amount which, in combination with their other property, exceeds the property limit.
Renter's Credit
Renter's Credit is exempt as income.
Renter's Credit is considered as property upon receipt.
Earned Income Credit (EIC) aka Earned Income Tax Credit (EITC)
The federal EIC is a special tax break for individuals who work full or part time and meet the income and other requirements established by the Internal Revenue Service (IRS). EWs are required to ask each CalWORKs recipient at their annual redetermination if they are eligible for and taking advantage of EIC. If they may be eligible but are not taking advantage of the EIC, EWs must provide the client with the federal EIC informing notice “It’s Your Money You Earned It Now Claim It and Save It” (PUB 429) and encourage the client to apply for it.
EIC is exempt as income, whether received as advance payments or as a single payment at the end of the tax year.
EIC is exempt as property for 12 calendar months starting with the month of receipt of the payment.
Example:
A client was employed during the year. She filed for both her State and Federal Income Tax Refunds. On February 10th she received $563 from the State. On February 18th she received $1,478 from the IRS. This included $762 EIC. She reported this on her February SAR 7, received March 3rd. She still has $1,235 left in her savings account. The EW would not consider any of these funds to be income. All but the EIC is counted as property.
The EW would use the balance of $1,235 less the $762 EIC (which is exempt for 12 months following the month of receipt) to determine the amount of property she had on April 1st. This would mean that she had $473, plus any other property counted in April.
Related Topics
Social Security, Railroad Retirement and Other Pensions
Social Security Benefits for Children
Social Security Benefits of a Minor Parent
Disability Benefits Other than Disability Based Income
Unemployment Insurance Benefits (UIB)