Important Guidance on the Earned Income Tax Credit (EITC) and Child Tax Credit for HUD Rental Assistance Programs

National studies indicate that 20% of the eligible families may not be claiming the EITC in their returns even though the EITC can return as much as $350 each month to working adults with children, helping children and helping to pay bills on time. The EITC and other tax credits do not count as income for calculating rent. This means that HUD Assisted Tenants will receive 100% of the benefit of the EITC.

For more information, please visit the IRS Earned Income Tax Credit site:
http://www.irs.gov/individuals/article/0,,id=96406,00.html

Free tax preparation assistance for low-income people can be found by visiting the following website:
http://www.aarp.org/money/taxaide/taxpreparation/


EITC and Child Tax Credit Policy Conclusions for HUD Rental Assistance Programs


  1. EITC and Child Tax Credits do not count as income for purposes of determining initial income eligibility for HUD Rental Assistance programs.
  2. EITC and Child Tax Credits are not counted for purposes of determining tenant rent payment.
  3. Even if the tenant paid no income tax, but received an EITC refund or advance payment, the EITC payment still counts as income for eligibility or tenant rent payment purposes.
  4. Any employment that creates the eligibility for the Earned Income Tax Credit continues to be reported by the tenant. Increases in income (other than the EITC itself) will continue to be handled in accordance with outstanding instructions. Willful failure to report employment and related income is fraud.
  5. Any deposit into an interest-bearing account from either one-time or monthly EITC proceeds is subject to the same disclosure requirements and income generated is treated like any other investment income.