Do You Have to Count Food Stamps on Your Federal Return?

Supplemental Nutrition Assistance Program or SNAP, more commonly known as food stamps, is a program of federal benefits provided by the United States Department of Agriculture that assists low-income families and the under-employed in affording nutritious food and basic household necessities. The program has been in operation since the 1960s, and currently serves more households than any other state or federal public-assistance program. However, anyone receiving food stamps should be aware of the tax treatment of these benefits by the Internal Revenue Service.

Federal law governs the food stamp program as well as income tax that is levied and collected by the IRS. The individual states administer the program, which is based on household income and the expected contribution of each household to the purchase of food and other goods. While the federal government funds the benefits, state and local governments bear about half the cost of administering the program.

The food stamp allotments made to each household are not counted as taxable income. Neither the IRS nor state or local taxing authorities may tax food-stamp benefits, according to federal law. If you receive food stamps, you do not need to declare their value on your annual tax return as part of your income. The same rule applies to Medicaid, Temporary Assistance to Needy Families (TANF) and Women and Infant Children (WIC) benefits.

In addition to not having to pay federal taxes on your benefits amount, retailers that accept food stamps also cannot charge sales tax on the purchases of items paid for with SNAP. This is a federal law, and still holds true, even if the state normally charges tax on food items. So, for instance, if you purchase a soda in a state that taxes these types of food items, there would be no sales tax applied if you're purchasing them with your SNAP benefits card.

While you are not taxed on your SNAP or food stamps benefits, you may not claim food stamps, or any other form of public assistance, as income on your federal tax returns as eligibility for the Earned Income Credit. Nor may you count the food stamps as support provided to children, in the matter of apportioning that support for a claim for the child tax credit. This is because any money or benefits you receive from public assistance programs is not income you earned, therefore, it cannot earn you any tax breaks or credits.