California law allows an exclusion from gross income for IHSS supplementary payments received by IHSS providers. IHSS providers only receive a supplementary payment if they paid a sales tax on the IHSS services they provide. The supplementary payment is equal to the sales tax paid plus any increase in the federal payroll withholding paid due to the supplementary payment.
However, the exclusion only applies to payments for care in the individual care provider’s home where the care recipient lives under the recipient’s plan of care.
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