I think it is, if it is replacing what you would be making with a job or business. This is from Fox News
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NEW ORLEANS — Out-of-work Gulf Coast shrimper Todd Pellegal spent his first $2,500 check from BP quickly, paying off bills and buying groceries for his family.He never even considered putting some of it away for taxes.Now he’s among the people up and down the Gulf Coast reeling from the oil spill disaster who are surprised — and frustrated — to find out the Internal Revenue Service may take a chunk of the payments BP PLC is providing to help them stay afloat.Many were already angry about how long the oil giant took to cut the checks. So when they got the money — generally about a few thousand dollars each so far — they spent it fast.“If they’re going to pay you a lump sum, like for a year, then bam, take the taxes out of the check,” said Pellegal, of Boothville, La. “But a little bit at a time, they shouldn’t.”Accountants have been trying to nail down the implications for thousands of taxpayers after President Barack Obama said BP would create a $20 billion disaster fund and provide another $100 million for oil workers who lose their jobs because of the six-month moratorium on deepwater drilling in the Gulf of Mexico.
Read the rest here and tell me what you think.
I have known many people in that area who do not declare all the money they make by shrimping, oystering, and some of the tourist related business. I am not painting all with a broad brush, but the people who are writing the checks know they must have proof of how much was actually made. I have a hunch some people are going to be shorted because they have left half their income as unreported to avoid taxes on it. They are the same people who are going to be incensed on being taxed on money they are given for relief, even though it is replacing previously earned income.