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My understanding is that welfare is not taxed if means-based (income and assets checked).  Otherwise, it is taxable.  Since the CA stimulus payments did not have anyone demonstrate their need or perform a means test, I don't believe this is resolved.  I did some reading on the general welfare exclusion, and there was a case where a taxpayer received a stimulus payment from the City of Berlin for the purpose of revitalizing the economy (kind of like CA did).  IRS taxed it.  They deemed NYC payments out of a September 11, 2001 fund as taxable.  The IRS also clarifies in Notice 2012-75 and Rev Proc 2014-35 that "grants received under social welfare programs that do not require recipients to establish individual need do not qualify under the general welfare exclusion."  Bailey v. Commissioner.  Determined under the federal income tax laws.....not state, local, sovereign tribal, etc.  While I see instances of the General Welfare Exclusion exempting disaster relief funds, the examples I see go specifically toward a personal need like food, housing, etc.  The GSS payments were not restricted as to how they could be spent.  I just do not think it is very clear and taxpayers did not receive a tax document, so we are having to ask if they received these payments.   I could maybe justify the GSS 1 payment made if someone received the CA EITC.  I have trouble with the GSS II being need based if it was given to anyone whose income was below the $75k/$150k threshold.  No matter, we still don't have anything concrete.