DCS RELATIVE CAREGIVER STIPEND

[Happyday88]

Hello, 

I apologize in advance for my long post.

I previously asked a question regarding a 1099-MISC form I received. I wanted to ask with more detailed information I now have. I have custody of my minor brother (our mother is deceased). I receive a monthly stipend from the DCS Relative Caregiver Program, which is 50% of what a foster parent would receive. I was never advised this would be taxable income. It is a reimbursement from the state for children who would have otherwise ended up in the state's custody in foster care. So the foster care parents DO NOT have to pay taxes on the money they receive. Yet the money that I receive comes from the same pot of money, just at 50%, which is 16-ish dollars a day. I am being told by my worker that it is considered earned income. I cannot find, for the life of me, in the legislation that this income is taxable. It is reimbursement like child support. Yet TurboTax counts it as if its self employment. Someone suggested I select the difficulty of care option. I am just not sure if that would be right in my state. I know I have to include this on my taxes. This is my last attempt to get a clear understanding in hopes of avoiding having to pay someone an arm and a leg to help me. So I am looking to see if anyone can help me or has any experience with this?

[AmyC]

The relative caregiver stipends is generally not taxable so let's look at the 1099-MISC. The payments are really reimbursements for food, shelter, clothing, certainly not wages.

Your worker is confusing tax terms. Income for eligibility (like food stamps or Medicaid) vs taxable income on your tax return. While it may not be taxable, it can count as income to help qualify for tax credits.

Follow these steps to get the 1099-MISC on your return and not taxable:

1. Open to the federal income
2. edit your 1099-MISC
3. values are entered,
4. continue
5. reason for 1099, DCS relative caregiver stipend
6. continue
7. Any uncommon situations?
8. Select this is a Medicaid wavier payment

If your program asks:

involve work like main job? No

What years? only 2025

Best wishes, you are doing great!

[Happyday88]

@AmyC  Thank you so much! Two more questions: if I click the medical waiver option, do I need a special tax form or approval to do so? And does it matter that my brother does not have a physical, mental, or emotional handicap for this option to apply?

[DaveF1006]

No special forms or approval are needed for this tax option. Your brother doesn’t need to have a physical, mental, or emotional disability for it to apply.