WARWICK, R.I. -- Rhode Island recipients of Federal Emergency Management Agency (FEMA) disaster relief grants will not have to pay taxes on those funds.
Disaster relief payments provided to survivors of Rhode Island’s March severe storms and flooding declared as a federal disaster March 29, 2010, are not subject to income tax, self-employment tax, or employment taxes, such as Social Security, Medicare and federal unemployment taxes.
Disaster relief payments include those received for the following:
- Necessary personal, family, or living expenses.
- Necessary expenses incurred for the repair or rehabilitation of a person’s residence (rented or owned).
- Necessary expenses from the repair or replacement of the contents in a person’s residence.
Answers to some frequently asked questions:
Question: Will I have to declare federal or state grants as income on future tax returns?
Answer: No. Disaster assistance grants are not considered income and are not taxable.
Question: Now that I have received a grant from FEMA will I still be eligible for Medicaid, welfare assistance or food stamps?
Answer:Yes. Housing grants from FEMA and Other Needs Assistance (ONA), funded by FEMA and the state, are not counted as income in determining eligibility for any income benefits programs funded by the U.S. government including Medicaid, welfare assistance, and food stamps.
Question: I currently receive Social Security benefits and if I earn more than a certain amount each year, I must pay tax on my Social Security income. Will FEMA grants increase my income and require me to repay Social Security?
Answer: No. Grants for housing and Other Needs Assistance (ONA) are not counted as income.
FEMA’s mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.