Is the NC Extra Credit Grant payment ($335-) taxable?

Many of us have had some reasons to believe that it is taxable. And perhaps some are also swayed to think that it is taxable since NC DOR has a subtraction for it on D-440 Sch. S line 33. However, please consider the following information.

A “qualified disaster relief payment” is defined by section 139(b) to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster. Since the stated purpose of NC’s Extra Credit Grant program is “to help families with qualifying children in North Carolina by providing economic support to assist with virtual schooling and child-care costs during the COVID-19 pandemic,” it seems reasonable to conclude that it falls within the definition of a “qualified disaster relief payment” and would therefore be excluded from a taxpayer’s gross income.”

IRS quote under FAQ’s regarding income and deductions:

” … COVID-19 outbreak is a “qualified disaster” for purposes of section 139 of the Code ..

Section 139(c)(2) of the Code provides that for purposes of section 139 of the Code, the term “qualified disaster” includes a disaster determined by the President to warrant assistance by the Federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121 -5207. The President has made such a disaster determination for all 50 states, the District of Columbia, and all U.S. Territories. A “qualified disaster relief payment” is defined by section 139(b) of the Code to include any amount paid to or for the benefit of an individual to reimburse or pay reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a qualified disaster.”

We feel that the above information is very important in helping you make an educated decision.