Are relocation benefits taxable?


If you are forced to relocate as a result of the taking of the property you occupy for a government project, pursuant to 49 C.F.R. § 24.209, no relocation payments received are to be considered as income for income tax purposes, eligibility for Social Security, or any other federal law, except for any federal law providing low-income housing assistance. The reason for this is that relocation benefit payments are considered to be reimbursements for expenses actually incurred by the person being displaced by a government project. However, many CPAs and tax advisors do not understand this portion of the applicable federal law. If you are being forced to relocate as a result of a government project, contact our eminent domain attorney to assist you with documenting your relocation claim to maximize the amount of benefits for which you are entitled to receive and to also help avoid any potential tax consequences.