Welfare Benefits for Native Americans & Oklahoma Exclusion


Under Internal Revenue Code section 139E, payments made under legislatively provided social benefit programs for the promotion of the general welfare of Tribal members are excluded from gross income by the recipient of the benefits.

The benefits must meet certain criteria and be listed in Revenue Procedure 2014-35. Under this procedure, the following benefits are listed as being excludable from income by the recipient.

Housing Programs
Programs relating to principal residences and ancillary structures that are not used in any trade or business or for investment purposes; that pay mortgage payments; enhance habitability of housing; provide basic housing repairs or rehabilitation; and pay utility bills and charges.

Educational Programs
Programs to provide students transportation to and from school, tutors, supplies and equipment for use in school activities and extracurricular activities; provide tuition, room and board; provide child care; and provide job counseling and placement programs, including interview and training expenses, tutoring, and clothing.

Elder and Disabled Programs
Programs for individuals who have attained age 55 or are mentally or physically disabled that provide meals through home-delivered meals programs or at a community center or similar facility; home care; local transportation assistance; and improvements to adapt housing to special needs.

Other Qualifying Assistance Programs
Programs to pay transportation costs for bus, taxi, and public transportation between an American Indian reservation, service area, or service unit area and facilities that provide essential services to the public (such as medical facilities and grocery stores); pay for the cost of transportation, temporary meals, and lodging of a tribal member or qualified nonmember while the individual is receiving medical care away from home; provide assistance to individuals in exigent circumstances; pay temporary costs for individuals involuntarily displaced from their homes; provide assistance for transportation emergencies; and pay the cost of nonprescription drugs.

Cultural and Religious Programs
Programs to pay expenses to attend or participate in an American Indian tribe’s cultural, social, religious, or community activities, such as pow-wows, ceremonies, and traditional dances; pay expenses to visit sites that are culturally or historically significant for the tribe; pay the costs of receiving instruction about an American Indian tribe’s culture, history; pay funeral and burial expenses and expenses of hosting or attending bereavement events; and pay transportation costs and admission fees to attend educational, social, or cultural programs offered or supported by the tribe or another tribe.

In addition to the above federal exclusions, Oklahoma law also allows for additional exclusions. If an Oklahoma taxpayer received income for services that are rendered on “Indian country” as defined in the U.S. Code (meaning any Indian reservation lands or allotments) that is within the jurisdiction of the tribe of which he or she is a member, that income is exempt under Oklahoma law from taxation.

To meet the requirements:
• the taxpayer must be a member of the tribe for which the services were rendered
• the services must be performed on tribal land
• the member must have maintained their principal residence on tribal land
• support must be provided, including proof of tribal citizenship, deed or proof of residence, and various employment records.

Please contact Stanfield + O’Dell with any questions.