Dear Monika,
Thank you for your response. My apologies, but the income I was asking about is not from IHSS (I only mentioned IHSS because it is called out in the 540 Schedule CA instructions I cited; I am also separately my daughter's IHSS provider, but I do not receive a W2 from them due to having established a live-in self-certification for tax exempt status some years ago.)
Both the W2 and the 1099-MISC I wrote about are Regional Center Medicaid Waiver payments under the California Self-Determination Program (SDP) and they were created by the Financial Management Service (FMS) who supports my daughter's SDP. I am a provider under her plan in two roles, one reported on a W2, the other one a 1099-MISC. Both documents are 'standard' documents, with amounts in box 1 of the W2 and box 3 of the 1099, and so on. They need to be reported on my tax returns. Under the SDP, the FMS agencies who create these forms could probably establish a process for allowing providers to self-certify that the payments involved are exempt from taxation under difficulty-of-care medicaid waiver rules, but they are not current set up to do that.
So my post, here, is about Regional Center SDP payments through an FMS that are reportable but need to be backed out correctly on both the federal and state returns. I described the issue I am trying to resolve - the double-back-out of the 1099 payments - correctly in detail and would love to know what you recommend I do about the issue I wrote about.
I appreciate all the detail you provided and am hoping for similar guidance on the problem I am trying to solved. Thanks again!
