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Tax Refunds, Earned IncomeTax Credits (EITC/EIC) and Benefits

Produced by Welfare Law Unit, Greater Boston Legal Services and MLRI
Reviewed September 2019

1. Do I have to tell DTA I got a tax refund or Earned Income Tax Credit (EITC/EIC)?

To be safe, report your tax refund or EITC/EIC to the Department of Transitional Assistance (DTA). If you do not report a tax refund or EITC/EIC, you may have problems with DTA. The Department of Revenue (DOR) shares tax information with DTA.

In most cases, your tax refund or EITC/EIC will not hurt your SNAP and TAFDC benefits.

2. I filed my taxes and got money back. How can I tell EITC money apart from a tax refund?

You can tell how much of your refund is EITC/EIC by looking at your federal and state tax returns. The EITC/EIC is on a separate line from the rest of your tax refund.

You may get a tax refund and EITC from the federal government, the Internal Revenue Service (IRS). You may also get a tax refund and EIC from Massachusetts' Department of Revenue (DOR). You may get money from both the IRS and the DOR. Your federal and Massachusetts refunds come as separate checks or deposits into your bank account.

3. Does my Earned Income Tax Credit count against my TAFDC benefits?

If you save any of your federal EITC or state EIC and still have some left in the 3rd month after you get it, DTA will count the left-over EITC/EIC as an "asset." An asset is savings in the bank or certain property you own. You can have a total of up to $5,000 in assets, counting all your assets together, and still keep getting the same amount of TAFDC. But if your total assets go over $5,000, your TAFDC will stop. You will not be able to get TAFDC again until your assets drop back to $5,000 or less.

Example 1

Missy’s family gets TAFDC. She gets $3,000 in EITC on April 23.

Missy’s EITC does not count against her TAFDC for April, the 1st month, or May, the 2nd month.

But whatever EITC Missy has saved into June, the 3rd month, counts as an asset. Missy has $300 of her EITC left by June, the 3rd month. She does not have any other assets, so all of her assets together add up to only $300. Missy can have up to $5,000 and still get TAFDC. Missy’s EITC doesn’t change her TAFDC at all.

Example 2

Jared’s family gets TAFDC. Jared gets $6,000 in EITC on May 15. Jared decides to save the $6,000 EITC to buy a car.

Jared’s EITC does not count against his TAFDC for May, the 1st month or June, the 2nd month, after he gets the EITC.

Starting in the 3rd month, Jared’s saved EITC counts as an asset. At the beginning of July, the 3rd month, Jared still has $6,000 in EITC. This is more than the $5,000 "asset limit" for TAFDC. Jared’s TAFDC stops because he is over the asset limit.

Note

As of May 2019, DTA does not count the value of 1 car for each household getting TAFDC.

4. Does my EITC/EIC count against my SNAP/Food Stamps benefits?

SNAP/Food Stamps are now called SNAP benefits.

EITC/EIC money will not impact SNAP benefits for most people.

EITC/EIC money may impact your SNAP benefits if:

  1. If someone in your household cannot get SNAP benefits because they broke a SNAP work rule or a SNAP or TAFDC reporting rule, your asset limit is $2,250. You cannot have more than $2,250 in assets and still get SNAP benefits.
  2. If you are age 60 or older or you are disabled, and you do not get SSI, and your income is more than $2,082 /month for 1 person or $2,818/month for 2 people, you have a $3,500 asset limit. Look at Chart 2 for larger households.

If you fit into 1 of these 2 groups, you may want to spend most of your EITC/EIC in the first 12 months after you get it. If you have any EITC/EIC saved after 12 months, it will count as an asset for SNAP benefits. If your total assets go over your asset limit, you may not be able to get SNAP benefits until your assets drop to the asset limit or less again.

Example 1

Jack and Jill get SNAP benefits together on 1 grant.

Jack and Jill have not broken any SNAP rules.

Jack and Jill are both over 60 and Jill is disabled. Their income is less than $2,818/month so they do not have an asset limit.

In April, they get an EITC payment of $4,000. Their SNAP benefits will not change. They can save their EITC/EIC as long as they want. They will keep getting SNAP.

Example 2

Beverly is 65 and her income is $2,100 each month. She gets SNAP benefits because her rent is very high. Because Beverly is a senior and her income is above $2,082/month, her assets count for SNAP. Her asset limit is $3,500.

Beverly gets an EITC payment of $3,800 in May. The payment does not count in May, the 1st month, or June, the 2nd month.

At the beginning of July, the 3rd month, Beverly still has the $3,800 EITC. Beverly’s EITC counts as an asset starting in the 3rd month. The $3,800 EITC Beverly has at the beginning of the 3rd month is more than the $3,500 asset limit, so her SNAP will stop. She can apply for SNAP again, after her assets drop to $3,500 or less.

5. Will my tax refund (not EITC/EIC) count against my TAFDC?

DTA counts your tax refund that is not EITC/EIC as an asset. An asset is savings in the bank or certain property you own. An asset limit is the amount of assets you can have and still qualify for TAFDC. The asset limit for TAFDC is $5,000. If you get a tax refund that is not EITC/EIC and you end up with more than $5,000, counting all your assets, your TAFDC will stop. You can apply again for TAFDC later, after your assets drop to $5,000 or less.

Example 1

Tim and his family get TAFDC. Tim gets a $2,500 tax refund that is not an EITC payment. The $2,500 counts as an asset right away. Tim does not have any other assets. He is not over the $5,000 asset limit, so the tax refund does not change his TAFDC.

Example 2

Lilly and her children get TAFDC. Lilly gets a tax refund that is not EITC money. Lilly’s tax refund is $5,000. Lilly already has $600 in savings when she gets the refund. Once she gets the refund, she has $5,600. This is more than the $5,000 asset limit for TAFDC, so Lilly’s TAFDC benefits stop. Lilly can apply again for TAFDC later, once her assets drop to $5,000 or less.

6. I got a tax refund that is NOT an EITC/EIC payment. Will it affect my SNAP benefits?

Food Stamps are now called SNAP benefits.

DTA counts your tax refund that is not EITC/EIC money as an asset. An asset is savings in the bank or certain property you own. An asset limit is the amount of assets you can have before your SNAP benefits stop.

Assets do not matter for most people who get SNAP benefits. Your tax refund probably will not change your SNAP benefits.

You only have to worry about an asset limit for SNAP benefits if you fit into 2 groups of people:

  1. If someone in your household cannot get SNAP benefits because he or she broke a SNAP work rule or a SNAP or TAFDC reporting rule you have an asset limit of $2,250. You cannot have more than $2,250 in assets and still get SNAP benefits.
  2. If you are age 60 or older, or you are disabled, and you do not get SSI, and your income is more than $2.082/month for 1 person or $2,818/month for 2 people, you have a $3,500 asset limit. Look at Chart 2 for larger households.

If you fit into 1 of these 2 groups and you get a tax refund that is notEITC/EIC money, the tax refund will count as an asset right away. If your assets go above your limit, your SNAP/Food Stamps may stop until your assets drop back below the limit.

Example 1

Julie and her sister Samantha live together and get SNAP on the same grant. They do not fall into either of the 2 groups that have an asset limit.

Julie gets a $3,000 tax refund and Samantha gets a $2,000 tax refund. The refunds are not EITC payments.

The refunds count as assets right away. But Julie and her sister do not have an asset limit for SNAP. So the refunds do not affect their SNAP benefits.

Example 2

Simon and Jazz get SNAP/Food Stamps, but Simon is off the SNAP/Food Stamp grant for an Intentional Program Violation (IPV). This means that they have an asset limit of $2,250.

Jazz gets a tax refund of $2,500. The refund is not an EITC payment. The refund counts as an asset right away and puts Simon and Jazz over their $2,250 asset limit. Their SNAP benefits stop. They can start getting SNAP again when their assets drop back to $2,250 or less.

 

TAFDC

Food Stamps/SNAP

EITC/EIC

Spend in first 2 months – no difference. Anything left after that counts. There is a 5,000 asset limit for TAFDC.

For most people: No change to SNAP benefits.

For certain people who have an asset limit: Spend in first 12 months – no difference

Tax Refund

Counts as an asset right away. There is a 5,000 asset limit for TAFDC.

For most people: No impact on SNAP benefits.

For certain people who have an asset limit: Counts as an asset right away.

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