Entering Exempt IHSS income to Maximize EITC

LilyCA1984 · ‎July 8, 2020

Hello,

Feigh v. Commissioner 152 tc no. 15, allows that income from difficulty of care payments (such as IHSS payments for in-home, family caregivers) are exempt, but now can be treated is earned income for the purposes of ETIC.

I read through IRB 2020–14 for the IRS, and I understand they are going to accept Feigh v. Commissioner.

But I couldn't find any guidance on how this should to correctly entered in the IRS 1040 form.

I have a client who was earning IHSS to care for her husband (who she lived with, hence exempt, received no W2), she was paid about $3600 in CY 2019 before he passed away. I would like to help her maximize her EITC.

Question 1: How should this be entered on the 1040 form to maximize EITC?

Question 2: California EITC is based off of IRS earned income, how should IHSS exempt earnings be correctly entered on the CA Form FTB 3514?

Thank you.

AmeliesUncle · ‎July 8, 2020

@LilyCA1984 wrote:
I have a client

What software are you using? If you are paid to prepare tax returns you can't be using TurboTax, so it depends on which other software you are using. It may be easier to post a question about that on the forum of whatever professional software you are using.

LilyCA1984 · ‎July 9, 2020

I'm not paid to prepare.

TurboTax and H&R.

I volunteer to help low income families self prepare their taxes and gain financial literary.

I became very interested because there was zero guidance or examples to correctly enter this information on a 1040.

Additionally, I thought it would help others in general.

Does anyone know the correct way to enter?

Does anyone have thoughts or answers to my 2 prior questions?

Thanks

Entering Exempt IHSS income to Maximize EITC

Deductions & credits

Deductions & credits