E-2210 Federal Tax Refunds and Earned Income Tax Credits

Revision 22-4; Effective Dec. 1, 2022

Federal tax refund, child tax credit (CTC), and earned income tax credit (EIC) payments are exempt from resources for a period of 12 months after receipt.

An EIC is a special tax credit that reduces the federal tax liability of certain low-income working taxpayers. This tax credit may or may not result in a payment to the taxpayer. EIC payments are allowed as an advance from an employer or as a refund from the Internal Revenue Service.

The CTC is a special refundable federal tax credit that is available to certain low-income taxpayers with earned income. They must be parents, step-parents, grandparents or foster parents with a dependent child. This child tax credit may provide a refund to people even if they do not owe any tax.

Relationship of income to resources. An unspent tax refund, EIC, or CTC payment is not counted as income or resources for the month it is received and for the 12 months following the month of receipt. After the 12-month period, count any remaining funds from the tax refund, EIC, or CTC payment as a resource.

Example: A person receives the payment in May. The payment is excluded as income and resources in May. Any remaining funds from the payment counts as a resource as of the first day of May of the following year.

Related Policy 

Miscellaneous Things That May Not Be Income, E-1740
Certain Federal Income Tax Refunds, E-3160
Exclusions from Resources Provided by Other Statutes, F-2260

E-2220 Student Earnings

Revision 09-4; Effective December 1, 2009

A person who is under age 22 and regularly attending school is considered a student. A student's income is exempt from the eligibility budget and the budget to determine co-payment, up to the monthly limit but not more than the calendar year annual limit.

This exemption may apply to an eligible or ineligible:

• person;
• child;
• spouse; or
• parent.

Apply the exemption:

• consecutively to months in which there is earned income until the maximum yearly limit is exhausted or the person is no longer a student under age 22; and
• only to a student’s own earned income.

The limits are set by the Social Security Administration for the SSI program and published annually in the Federal Register. The monthly and yearly limits are calculated annually based on increases in the cost of living index. Under this calculation, these amounts will never be lower than the previous year's amounts. However, there may be years when no increases result from the calculation.

See "Special Income Exemption for Student" in Appendix XXXI, Budget Reference Chart, for the monthly and yearly amount limits for the exemption.