Get your taxes done using TurboTax

No, the income is not taxable.  The instructions below include steps to enter the payments as earned income to receive a credit or to report them as unearned income. Either way the payments will not be subject to federal or California state income taxes.

1. Log into TurboTax and click on any topic to continue
2. Click on Federal from the menu on the left-hand side and then click on Wages & Income at the top
3. If you choose to report your payments to receive a credit: Click Edit/Add next to Job (W-2) and then click on Add a W-2.
4. Enter the information as reported on your W-2. Enter the amount you received for IHSS Payments in Box 1 (even if this amount is not reported in box 1 of your W-2.)
5. If you choose not to report it as earned income to receive a credit: Scroll down to "Less Common Income" and click on Show More.
6. Click on Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C. Then click on Start or Revisit next to Other reportable income and select Yes
7. Enter "In-Home Support Services Payments, EIN # (enter EIN number from W-2)" in the description box and then enter the amount from your W-2. Click Continue.
8. To enter the offset for the payments (whether you chose to report as earned income or not): Click on Wages and Income at the top of the screen. Scroll down to "Less Common Income" and click on Show More.
9. Click on Start or Revisit next to Miscellaneous Income and then click on Start or Revisit next to Other Reportable Income and select "Yes" or "Add Another Income Item" if applicable
10. In the "Description" section, enter "IRS Notice 2014-7 excludable income" and in the "Amount" section, enter the W-2 box 1 amount (or amount of IHSS Payments) as a negative (-) number.