FEMA And State Grants Won't Affect Your Social Security Or Taxes
Release Date: November 15, 2004
Release Number: 1539-273
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ORLANDO, Fla. -- Some Floridians have expressed concern that state and federal grants might cause them to sacrifice Social Security benefits, pay additional taxes, or give up income-based benefit programs, but state and federal officials say that concern is unfounded.
Craig Fugate, state coordinating officer and head of the State Emergency Response Team (SERT), said “A state or federal grant to individuals does not add to their taxable income, as long as the grant is given as assistance to recover from a disaster.”
The Federal Emergency Management Agency (FEMA) and SERT have awarded millions of dollars in grants to individual Florida citizens affected by recent hurricanes. Those grants have paid for temporary housing and for Other Needs Assistance (ONA), which covers items such as personal property loss, medical care, and transportation. Here are answers to typical questions:
Question: I’m between 62 and 65, and have chosen to receive Social Security benefits. If I earn more than a certain amount each year, I must repay $1 of my Social Security payment for every $2 I earn. Will FEMA grants add to my income and require me to repay Social Security?
Answer: No. FEMA grants for housing and ONA are not counted as income.
Question: I’m over 65, but if I earn more than a certain amount, I must pay tax on my Social Security income. Will FEMA grants boost my income and require me to pay tax on my Social Security income?
Answer: No. Again, the IRS does not count FEMA grants for housing and ONA as income.
Question: Will receiving a grant cause my income to increase to the point that I am no longer eligible for Medicaid, or welfare assistance, or food stamps, or Aid to Families with Dependent Children (AFDC)?
Answer: No. Grants for housing and ONA are not counted as income in determining eligibility for any income-tested benefit programs that the U.S. government funds.
Question: Does any kind of FEMA or state grant count as income?
Answer: Yes--the IRS considers mitigation grants to make homes and businesses safer from future disasters to be taxable improvements to private property. However, these grants are entirely separate and are not awarded to individuals registering for disaster assistance.
“Grants do not add to the taxable income of storm victims who register with FEMA for disaster recovery assistance,” assured Bill Carwile, FEMA federal coordinating officer for Florida. “They also do not affect the person’s eligibility for other federal assistance programs. They are part of FEMA’s mission to help victims of disaster return to normal life as quickly as possible.”
On March 1, 2003, FEMA became part of the U.S. Department of Homeland Security. FEMA’s continuing mission within the new department is to lead the effort to prepare the nation for all hazards and effectively manage federal response and recovery efforts following any national incident. FEMA also initiates proactive mitigation activities, trains first responders, and manages the National Flood Insurance Program and the U.S. Fire Administration.
Last Modified: Tuesday, 16-Nov-2004 15:32:28