Are Taxes Withheld on Welfare Checks?

Indigent individuals and families in the U.S. are eligible to receive various forms of government assistance to help them get by. For families, one of the main forms of support is the monthly "welfare check." While the federal government provides the majority of the funds for welfare checks (through Aid for Families with Dependent Children, or the AFDC program), the programs are actually run by the various state health and human service agencies and have different eligibility criteria and payment amounts.


Eligibility for Welfare Checks

The basic eligibility criteria for welfare checks in most states is a family income up to 125 percent of the federal poverty guidelines. For example, as of 2011, the federal poverty guideline for a family of four living in any of the 48 contiguous states or Washington, D.C., is $22,350, meaning that if your total family income is less than $27,938, you are eligible for assistance.


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Tax Liabilities

The U.S. income tax system is designed to be progressive — that is, people with smaller incomes pay a smaller percentage of their income as tax than do those with higher incomes, who should pay a higher percentage. Although the system has become complicated and compromised at the higher end, where those with large incomes can find tax shelters to avoid paying taxes, the basic premise that those with very low incomes do not owe any income taxes remains. After taking personal and dependent exemptions as well as the standard deduction, anyone with an income low enough to qualify for welfare will not have any tax liability.


No Taxes Are Withheld

No income taxes are withheld from welfare checks because no taxes are owed. However, in many cases it is to your advantage to file a tax return even if you did not have any taxes withheld, as you may be eligible for a child or other tax credits that could result in a tax refund.


Other Taxes

Just because a welfare recipient does not pay income taxes does not mean she does not pay any taxes. Recipients of welfare checks do pay such levies as sales tax, gasoline tax, phone and utility taxes, cigarette and alcohol taxes, and cab and airport taxes.