Many U.S. citizens and residents qualify to receive a stimulus payment known as the Economic Impact Payment (“Payment”) this year as authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The amount of the Payment received depends upon several factors such as adjusted gross income, tax filing status, and number of dependents.
People with disabilities and participants in income-based programs, such as Medicaid, SSI, SNAP, TANF and other federally funded means-tested programs may receive a Payment, which raises questions about the impact of the Payment on their ability to qualify for much-needed assistance and services.
On their website, the IRS provided answers to many questions about the Payment, including the following relevant information: the Payment is not included in gross income; no income tax will be owed on the Payment; and the Payment will not affect income for the purposes of determining eligibility for federal assistance or benefits programs. See https://www.irs.gov/coronavirus/economic-impact-payment-information-center
The IRS classified the Payments as an advance payment of a new temporary tax credit that eligible taxpayers can claim on their 2020 return. Therefore, Chapter 26, Section 6409 of the U.S. Code applies as it states: “Notwithstanding any other provision of law, any refund (or advance payment with respect to a refundable credit) made to any individual under this title shall not be taken into account as income, and shall not be taken into account as resources for a period of 12 months from receipt, for purposes of determining the eligibility of such individual (or any other individual) for benefits or assistance (or the amount or extent of benefits or assistance) under any Federal program or under any State or local program financed in whole or in part with Federal funds.” See 26 U.S. Code § 6409
It is important to note the expiration date in the code provision above because the Payments will not be counted as a resource now, but upon the expiration of 12 months from the receipt of the Payment, the funds will be considered a resource for purposes of determining eligibility for Federal program or under any State or local program financed in whole or in part with Federal funds.
Please call our office well in advance of this 12 month expiration date to speak to an attorney about the options for asset protection and estate planning specifically for individuals who qualify for disability benefits or other services.
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Article written by Waldron & Schneider attorney Heather Benzenhoefer (view her attorney profile)