MonikaK1
Expert Alumni

State tax filing

If I understand correctly, you are concerned that your California IHSS "difficulty of care" wages don't have Social Security and Medicare taxes withheld. You could bring up this subject with the agency that is employing you for information about the rules under which you are employed. It's possible that your wages could be classified as subject to Social Security and Medicare depending on how the employment arrangement is set up.

 

See the excerpt below from this IRS webpage that addresses the tax treatment of Medicaid waiver payments.

 

Q12. I receive payments that are excludable from gross income under Notice 2014-7. Are the payments subject to Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA)?

A12. Maybe. Whether the payments are subject to social security and Medicare taxes depends on whether you are an employee of the agency, an employee of the individual care recipient, or an independent contractor. If the agency is your employer, the payments are subject to social security and Medicare taxes. See Q&A 18 under Agency Questions. If the care recipient is your employer and these payments are wages for that employment, the payments are subject to social security and Medicare taxes unless one of the exceptions for domestic services applies. See Q&A 19 under Agency Questions. If you are an independent contractor, the payments are not subject to social security and Medicare taxes. See Q&As 13 and 14.

 

 

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