So I started doing my California state tax return and I ran across a section that confused me.
1. Does ... or ... have tax-exempt Medicaid waiver or IHSS payments?
2. Is the amount of Medicaid waiver payments, IHSS payments, or IHSS supplementary payments already included in ...'s $... of state wages?
3. Would you like to include these payments in ....'s California earned income?
I do not live with my recipient, although she's my mother, and I know my IHSS payments are federally taxed. But since the 1st question was not clear as to whether it's "federal tax-exempt IHSS payments" or "IHSS payments" period. Then upon checking an FTB link I ran across "New: IHSS income may now be excluded from gross income (excluded from taxation) and still be included as earned income for purposes of determining the California Earned Income Tax Credit." I'm inclined to assume that I'm not taxed by California for these earnings? Is that correct? If so, when did this start?
Assuming, this is correct, and the answer to question 2 is a yes, what does the 3rd question really mean? Which answer will give me an advantage or does it all depend on my overall income? Thank you.
