AFI Q & As: Guidance Concerning Treatment of Refundable Tax Credits

Many low-income individuals and families who are eligible for AFI-funded IDA projects are also eligible to receive benefits from Federal refundable tax credits. These include the Federal Earned Income Tax Credit, Child Tax Credit, American Opportunity Credit, and the Making Work Pay Credit.

This update provides tips for AFI grantees on: 1) The effect of these credits on eligibility for participating in an AFI-funded IDA project; and 2) Depositing the credits as IDA savings.

Does receipt of these credits affect a person's eligibility to enroll in an AFI-funded IDA project?

No, receipt of these benefits should not have any effect on a person's qualifications to participate in an AFI project. AFI grantees should not consider the credits as household income or household assets when determining an individual's eligibility to participate in an AFI-funded project.

Does a current AFI project participant's receipt of these credits affect their eligibility to continue as a participant?

No, receipt of these credits should not have any effect on a participant's eligibility to remain in the project.

May current AFI project participants deposit the credits into their IDAs?

Yes, the credits are considered income for purposes of saving in an AFI-funded IDA. Therefore, individuals participating in AFI projects may deposit money received via these credits into their IDAs.

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 includes provisions that require grantees to disregard tax credits and tax refunds when determining eligibility for many Federal programs. ACF has issued guidance on the new provisions.