Law softens impact of tax credits on eligibility

Posted by on March 20, 2011

Law softens impact of tax credits on eligibility

For years some families have been afraid to save their tax refunds because the savings could impact their eligibility to receive public benefits.

Recently, however, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, greatly simplified and standardized the rules for how Earned Income Tax Credit, Child Tax Credit and any tax refunds are treated in determining eligibility for other public benefit programs.

The new law disregards tax refunds received after December 31, 2009 as income and resources for programs funded in whole or in part with federal funds.

This legislation should have a positive effect on low-income families who would like to save their tax refunds for the future without losing vital benefits.

The US Dept. of Health and Human Services recently released instructions to agencies managing numerous federal benefits (including Temporary Assistance for Needy Families (TANF), the Low Income Home Energy Assistance Program (LIHEAP), the Supplemental Nutrition Assistance Program (SNAP), Medicaid, Children’s Health Insurance program (CHIP), Supplemental Security Income (SSI), and benefits funded by the Social Services and Child Care and Developmental Block Grants.

Go here for an IRS fact sheet on the changes.

http://hosted.uwsepa.org/newsletter/FactSheetTaxRefunds.doc