Many families have found themselves in strenuous financial situations and struggling to pay for rent due to the on-going pandemic. In a bid to give rental assistance, on December 27, 2020, the Department of Treasury allocated certain funds to states and political subdivisions, U.S. territories, Indian Tribes, and the Department of Hawaiian Homelands (“Distributing Entity”). Distributing entities can use certain funds to provide financial assistance to households to pay rent, utilities, home energy expenses and other related expenses.
Additionally, the American Rescue Plan Act of 2021, appropriated additional funds for distributing entities to provide financial assistance to households to pay rent, utilities, home energy expenses, and other related expenses.
Payments under either provision are referred to as “Emergency Rental Assistance”.
Here are a few helpful things you should know:
- Emergency Rental Assistance payments and payments for utilities or home energy expenses from a distributing entity made to eligible households are not considered income to members of the household.
- Emergency Rental Assistance Payments made directly to the landlord or utility companies on renter’s behalf are not considered income to the household member either.
- Rental payments made to a landlord, whether from the tenant or from a Distributing Entity on the tenant’s behalf through an Emergency Rental Assistance program, are includible in gross income for the landlord.
- Utility payments made to a utility company, whether from a customer or from a Distributing Entity on the customer’s behalf through an Emergency Rental Assistance program, are includible in gross income for the utility company.
You can find more information here.
Questions? Contact your Henry+Horne tax professional today!