Social Security

Retention Date: 01/18/2025


A. Purpose

This emergency message (EM) provides instructions for evaluating state or local refundable tax credits as assistance based on need (ABON) for Supplemental Security Income (SSI) purposes.

B. Background

While federal, state, and local governments may issue refundable tax credits, this guidance only pertains to state and local refundable tax credits.

A tax credit reduces the amount of an individual’s tax liability (i.e., the amount of taxes owed). A tax credit can be non-refundable or refundable. When a refundable tax credit exceeds an individual’s tax liability, they generally receive the difference in the form of a refund or an advance payment. An individual may receive a refundable tax credit even when they do not owe any taxes. Additionally, an individual may receive a refundable tax credit in advance. For example, an individual may opt to receive early (e.g., monthly) a portion of their estimated refundable tax credit that would have ordinarily been received as a one-time payment the following tax year.

NOTE: For SSI purposes, we distinguish between a refund or credit that is not a return of the individual’s own money, which generally constitutes income, and a refund or credit that is a return of the individual’s own money, which does not constitute income (see SI 00815.270 and SI 00815.250). A refund or advance payment from a refundable tax credit (i.e., the subject of this EM) is not a return of the individual’s own money and thus generally constitutes income. By contrast, many income tax refunds are a return of the individual’s own money and thus do not constitute income. Also, the instructions in SI 00830.060 and SI 01130.676 apply only with respect to federal tax refunds and credits, not state or local tax refunds and credits.

C. Policy for the income and resource treatments of refundable state and local tax credits

Exclude from income as ABON a refund or advance payment from a refundable state or local tax credit if the assistance is:
· provided under a program which uses income as a factor of eligibility; and
· funded wholly by a state (including the District of Columbia, and the Northern Mariana Islands), a political subdivision of a state (including Indian tribes), or a combination of such jurisdictions.

For example, an individual has a $700 state tax liability and qualifies for a $1000 refundable state tax credit. The individual receives $300, which is the difference between the refundable state tax credit and the state tax liability. Exclude the $300 from income as ABON.

NOTE: If any ABON is retained into the next month, it is a countable resource (unless otherwise excluded).

D. Procedure for documenting refundable state and local tax credits

STEP	ACTION
1	Does a precedent for the assistance exist? · If yes, absent evidence to the contrary, accept the individual's allegation as to the type and source of the assistance and exclude it without further development. · If no, go to Step 2.
2	· Use documents in the individual's possession or contact the administering agency to determine the program under which the assistance is provided. · Verify with agency personnel and/or program descriptions that no federal or private funds are involved and that the program uses income in arriving at eligibility determinations. · Add the precedent to the State and Local Income Precedent and Resource Center.

E. Example

The State of Minnesota established a refundable child tax credit (CTC) which is fully funded by the State. In 2023, families with children were eligible for the full value of the refundable CTC until their income reached the phase out threshold, which was $35,000 for married joint filers and $29,500 for other filers. Following instructions in subsection C, treat the Minnesota CTC as ABON because the program uses income as a factor of eligibility and is wholly funded by the State. Per subsection D, absent evidence to the contrary, accept the individual’s allegation as to the type and source of the assistance, if there is a precedent. If there is no precedent, follow instructions at Step 2 in the chart.

Direct all program-related and technical questions to your Regional Office (RO) support staff using vHelp or Program Service Center (PSC) Operations Analysis (OA) staff. RO support staff or PSC OA staff may refer questions, concerns or problems to their Central Office contacts.

F. References

SI 00815.250 Rebates and Refunds
SI 00815.270 Income Tax Refunds
SI 00830.175 Assistance Based on Need (ABON)
SI 00830.060 Federal Tax Refunds and Advance Tax Credits for SSI Income Purposes
SI 01110.001 Role of Resources
SI 01130.676 Federal Tax Refunds and Advance Tax Credits for SSI Resources