Jun 11 2009
Late(r) Breaking News:
Friday, June 12, 2009
The OSD tax person advised today that they have a “fix” that will make HAP benefits in the PCS category non-taxable. The fix is under review by OMB; OSD hopes to attach the provision to a bill later this year. So for now, HAP benefits are taxable, but if the proposed measure passes Congress, the PCS HAP category could become tax exempt .
June 11, 2009
We just found out some of the financial assistance for members under the Homeowners Assistance Program is taxable for some applicant categories. The PCS category is one of the taxable categories and we are determining whether the other categories are affected.
This is a surprise to us as we believed the benefit to be excluded as income as was HAP program payments prior to this recent expansion of the program. See IRS Publication 3, page 4.
We are researching this issue and will report back as soon as we can get a source and a decision. In the meantime, if you apply for the HAP, ask about the tax status of your possible benefit. It could be that your $100,000 HAP payment could go down as income when you file your taxes for 2009.