CC Income Tax Refunds

Revised 10/12/2021

Policy

Federal income tax refunds are excluded for all Medical Assistance (MA) programs. Most state income tax refunds are also excluded for all MA programs.

Exception:

For MAGI programs, a state income tax refund is counted as unearned income when both of the following are met: 

• The person itemized deductions on their federal tax return; and

• Claimed a deduction for state and local income taxes paid, instead of claiming state and local sales tax paid.

 

Advance refundable tax credits are considered tax refunds and are excluded for all MA programs.

 

Definitions

Term	Definition
Advance refundable tax credit	A tax credit that is both: Paid by a tax agency to the customer before the customer files taxes to claim it; and Not limited by the customer’s income tax liability.
Income Tax Refunds	Any money paid to a customer in the form of a refund of taxes paid.

 

Proof

Income is first obtained through the Federal and State Data Services Hubs. If needed, other proof includes:

• Federal income tax return; or

• Bank statements that clearly identify the deposit.

 

Legal Authority

This requirement applies to the following programs:

Program	Legal Authorities
ALTCS SSI-MAO Medicare Savings Program	42 USC 1382a(b)(19) 20 CFR 416.1103(d)
Adult Caretaker Relative Pregnant Woman Child KidsCare	42 CFR 435.603 42 CFR 457.10, 300, 301 and 315 AAC R9-22-1420(C)(15) (2013)