Do You Claim TANF on Your Taxes?

The Internal Revenue Service collects taxes on income that individuals receive from many different sources apart from pay earned by working a job, such as interest, dividends, alimony, rent and royalties. Certain sources of income, however, are not considered taxable income and are excluded when determining whether you have to file an income tax return. Money received from the Temporary Assistance for Needy Families (TANF) program is non-taxable income.

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TANF Basics

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TANF is a federal government program that provides income to low-income families with children under the age of 18. According to the state of Indiana, a family must not have assets in excess of $1,000 at the time of applying for TANF, although a home is exempt. TANF is considered a "welfare" program, a term that describes any government program designed to provide income or resources to those in need. The Administration for Children and Families states that TANF replaced several other welfare programs such as Aid to Families with Dependent Children and the Emergency Assistance (EA) program in 1996.

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TANF and Income Taxes

The IRS does not tax the funds people receive from the TANF program. According to IRS Publication 525, "governmental benefit payments from a public welfare fund based upon need" are not included in your taxable income, so you should not claim such payments on your taxes. This statement applies to TANF income, since it is a welfare program.

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Benefits

The fact that TANF benefits are not subject to taxation allows needy families to use all of their TANF funds to meet their basic living needs instead of sending some if it back to the government. The purpose of TANF is to support needy families; taxing benefits would undermine the goal of the program. In addition, since families that receive TANF have low incomes, they would likely owe little if any taxes on funds even if they were included in taxable income.

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Considerations

All need-based welfare income is exempt from income taxes. Examples of other types of income besides TANF that are exempt from taxation include Supplemental Security Income (SSI), food stamps, child support, federal income tax refunds and a portion of Social Security benefits.

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