55. Does DTA exclude any money from the lump sum rule?
DTA should exclude all money that the EAEDC rules say is noncountable, such as a lump sum of money from an earned income tax credit or a cash contribution from a non-legally responsible person. See Question 49. DTA should exclude the first $600 in lump sum income. 106 C.M.R. § 704.240(B)(7).
DTA should exclude money from a lawsuit or settlement that was intended to replace property you lost or to reimburse you for expenses and which you actually used to pay for or replace these items. See 106 C.M.R. § 704.240(B)(3); 106 C.M.R. § 704.250(EE); DTA Transitions, May 2010, p. 3.
DTA should exclude money that someone (like a landlord or a utility company) refunded to you, if you originally paid them with money you got from DTA.
106 C.M.R. § 704.250(DD).
DTA should exclude up to $7,500 in relocation payments you received to get you to leave a foreclosed property plus additional amounts you can verify are being used for relocation expenses. DTA Transitions, Jan. 2008, p. 7.
In addition, DTA should exclude money you spent for back bills you incurred while you were waiting for the lump sum, but this rule applies only if you spent the money for the following:
- medical care or health insurance;
- transportation costs (up to $150 per month);
- purchase, replacement, or repair of basic household furniture or specific appliances (does not include television or other electronic equipment) up to $2,500;
- basic repairs to your home up to $2,500, provided you own the home;
- court-ordered judgments, including child support or alimony;
- taxes and other debts to the government.
If someone else paid for these things for you and you paid the person back after you got the lump sum, you can deduct what you paid. However, you must have written verification that you owed the money and used the lump sum to pay your debt.
Sometimes DTA will exclude money received because of injury to a legally incompetent person (a child is legally incompetent), if the money is placed in an irrevocable trust for the injured person and is restricted for certain purposes. You will need a lawyer to set up the trust. 106 C.M.R. § 704.240(B).
Money you received before you applied for EAEDC is not subject to the lump sum rule but may be treated as an asset. See DTA Transitions, May 2010, pp. 3-4.