Federal Tax Exemption

[Ol_Stever]

Hello,

I am the legal caregiver for my sibling. I am employed through the State of Illinois as such. In our recent meeting, they stated that if we are the caregiver for a relative, we are exempt  from federal taxes for the position. We are to enter this on or tax return.  I was unaware of this and have not claimed the exemption. 

A few questions,

1. Is this true?

2. If it is true, are there any requirements?

3. What would the procedure be to amend my taxes? Do I do it, or can I have TurboTax complete it for me?

3. How many years back can be amended? 

Thank you!

[RobertB4444]

1. Yes.  Caregiver income is optional to enter as earned income.  

2. Yes.  You have to be paid as a caregiver to a family member.  Which you are.

3. You can log in to your TurboTax account and go to the year that you want to amend and click the 'Amend' button.  Only the 2024 amendment can be filed electronically so any other will have to be mailed in.

4.  You can amend back up to 7 years but you can only get a refund for the last three so I would just do 2022, 2023 and 2024.

@Ol_Stever 

[Ol_Stever]

Thank you!

What are the steps/process for amending once logged in? I did not see anything about the Caregiver Exemption. 

Is there an area where it is listed?

If I cannot figure it out, can I pay TurboTax to conplete the three years of exceptions for me? 

[SharonD007]

TurboTax Full Service will only be able to amend your 2024 tax return if they prepared your original tax return.

When you amend your tax returns, you will have to select that you need to correct your W-2 and check that the W-2 is for a Medicaid Waiver Payment.

Review the TurboTax Help article How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax? for more information.

[Ol_Stever]

Thank you!

Is it required that I live with my sibling that I am the legal caregiver for? My residence is in the same building but across the hall. Even when I am off the clock, I am available to them 24/7. I am rarely at my own residence. 

[DawnC]

Yes, the care recipient has to live with you in your home or you can live in their home.  If you live in their home, that has to be your only home.   See questions and answers #2-4 here.

Section 1915(c) enables individuals who otherwise would require care in a hospital, nursing facility, or intermediate care facility to receive care in the individual care provider's home. The notice provides that the Service will treat these Medicaid waiver payments as difficulty of care payments excludable from gross income under § 131 of the Internal Revenue Code.

Individual care providers who receive Medicaid waiver payments for the care of eligible individuals in their homes and payers of Medicaid waiver payments have raised several questions not addressed in Notice 2014-7.   The link above has the additional Q & A.