The Supplemental Nutrition Assistance Program often is referred to as "food stamps", even though the benefits now are delivered via government-issued debit cards, rather than stamps or coupons. Under any name, SNAP helps low-income individuals and families purchase food. The benefits are not taxable income.
Food Stamps and Taxable Income
The IRS says if you receive SNAP benefits, they do not count as taxable income. Receiving food stamps won't affect your return, increase your tax bill or reduce your refund. That's because food stamps are a type of welfare benefit, and welfare benefits don't count as taxable income as long as they're based on need. Unemployment benefits paid out of your state's unemployment insurance system are the only exception — you do report them on your return and pay taxes on the money you receive.
Food Stamps and Sales Tax
You also don't pay sales tax when you buy food with SNAP debit cards, even if you live in one of the states that charges sales tax on food. If you use SNAP to buy seeds or plants for growing food at home — the only legitimate non-food purchase — there's no sales tax on the plants, either.
Getting Money Back
SNAP benefits don't affect your tax refund, but your tax refund might affect your SNAP benefits. The program can disqualify you based on your income or the value of your assets. The income limits aren't the problem, here. If say, you receive a $1,200 refund, that doesn't affect benefits as SNAP doesn't count refund income. If you receive a refund through the Earned Income Tax Credit, that doesn't count as income for SNAP or any other federal welfare benefits.
However some states may count the amount refunded among your assets once you deposit it. In Massachusetts, for instance, an EITC refund counts as an asset two months after you receive it. A regular return counts as an asset immediately. Most of the state's SNAP recipients aren't subject to asset limits, but those who are — anyone with a family member who broke SNAP rules, for instance — can be disqualified for excess assets until they spend the money down.
SNAP and Dependents
If you hope to claim an adult family member as a dependent and she's receiving SNAP benefits, her food stamps could alter how she can appear on your tax return. To claim an adult child or relative as a dependent, for instance, you have to provide at least <ahref="http: www.hrblock.com="" tax-answers="" services="" jsp="" article.jsp?article_id="67700"" target="_blank"> </ahref="http:>half her support. To calculate this, add together all the income she receives, including welfare benefits, and see what percentage of the total comes from you. If you contribute less than 50 percent, including in-kind contributions — the value of room and board — you can't claim the dependent exemption.
- U.S. Department of Agriculture: Supplemental Nutrition Assistance Program (SNAP)
- Internal Revenue Service: Tax Impact of Job Loss
- U.S. Department of Agriculture: Facts About SNAP
- Internal Revenue Service: Taxable and Nontaxable Income
- Massachusetts Legal Service: Tax Refunds, Earned IncomeTax Credits (EITC/EIC) and Benefits
- H&R BlocK: If My Adult Child Receives Food Stamps, Will I Still Be Able to Claim Her as a Dependent?