Caregiver services for Veteran husband

[aleervin]

My husband is a 100% service connected disable veteran and I received a 1099-MSC from the V.A. for providing bowel and bladder services.  Is this reportable as self-employment income?  Although I receive this every year, it is not a for-profit service and is only provided for my husband.  I do not think I should be paying self-employment taxes.  Please help.

[DianeC958]

If this amount is reported in Box 3 of the 1099-Misc you receive, here is how to report it so that is does not appear as Self-Employment Income

Enter the 1099-Misc

On the next screen Describe what the payment was for

On the next screen select "none of these apply"

On the next screen select "No it didn't involve work like my main job"

On the next screen select "I got it in 2019" ONLY 

On the next screen select No, it didn't involve intent to earn money

TurboTax will put the amount on line 21 of form 1040 as other income

[aleervin]

Hi DianeC958,

Unfortunately, the payments are reported in Box 6 "Medical and Health Care Payments, and Box 7 "Nonemployee Compensation" so I guess it would be taxable income.  I really appreciate your prompt expert response.

[DMarkM1]

No you do not owe self-employment taxes. It is reported as other income on line 7. It is taxable income however.  Here is a link with IRS discussion. 

1.  Click "Income & Expenses" at the top of the page

2.  Scroll down to "Less Common Income"

3.  "Show More"

4.  "Start/Revist" "Miscellaneous Income"  

5.   Describe as "Family Caregiver" 

This will show on Schedule 1 line 8 that carries to Line 7A on your 1040.  No self-employment taxes.

[Honeytutu]

Im in a similar situation but on my 1099- MISC only box 6 is filled. Would that be taxable? I was told in the past it’s not taxable and it would be considered a deductible IF I had other income. Which I don’t.  That was for 2019. Now for 2020 I sent my 1099-MISC and other paper work I received from health insurance. And it sounds like I may have to pay taxes. So I’m very confused.  

[DMarkM1]

It does appear that the income is taxable, but as a family caregiver you would not need to pay self-employment taxes. 

On your tax return you are reporting to settle income taxes and employment taxes (social security/medicare).  When a form 1099 is issued it normally indicates that the receiver is self-employed and will pay all the employment taxes, called self-employment taxes which is social security and medicare taxes. That is in addition to tax on the income.  

Per this IRS instruction family care providers are exempt from the self-employment taxes on income for providing that family care.  However, the tax on the income is not excludable and is reported on a form 1040 for individual taxes. Here is how to enter the income in TurboTax.

1.  Click "Income & Expenses" at the top of the page

2.  Scroll down to "Less Common Income"

3.  "Show More"

4.  "Start/Revisit" "Miscellaneous Income"  

5.   Describe as "Family Caregiver" 

This will show on Schedule 1 line 8 that carries to Line 7A on your 1040.  No self-employment taxes.

The VA does have a program for Veterans enrolled in the Caregiver Support Program where a stipend is paid to the family caregiver and that is not taxable.  However, a 1099 would not be issued for those payments.  You should contact the VA for more information on your caregiver status.  Here is a fact sheet with more information.

[itr674]

Do you have a update "fact sheet" link, this one is not working.

Here's a look back over eight years of 1099-MISC and 1099-NECs from the VA.

2023:  1099-NEC:  Box 1 Nonemployee compensation, all other boxes blank.

2022:  1099-NEC:  Box 1 Nonemployee compensation, all other boxes blank.

2021:  1099-Misc:  Box 6 Medical and health care payments, all other boxes blank.

2021:  1099-NEC:  Box 1 Nonemployee compensation, all other boxes blank.

2020:  1099-Misc:  Box 6 Medical and health care payments, all other boxes blank.

2020:  1099-NEC:  Box 1 Nonemployee compensation, all other boxes blank.

2019:  1099-Misc:  Box 7 Nonemployee compensation, all other boxes blank

2018:  1099-Misc:  Box 7 Nonemployee compensation, all other boxes blank

2017:  1099-Misc:  Box 7 Nonemployee compensation, all other boxes blank

2016:  1099-Misc:  Box 7 Nonemployee compensation, all other boxes blank

[itr674]

Interesting that the term "caregiver" is not used in "Publication 926, Household Employer's Tax Guide For use in 2024", but is used by IRS in topic "Family caregivers and self-employment tax" located at https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-....

[itr674]

DMarkM1, per IRS discussion at link listed below, family caregiver income should be entered on Sch 1 Line 8j, so, why can't I add my wife's VA non-employee compensation income on Turbotax H&B 2024 Sch 1 Line 8j ?

https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-...,

From IRS website:

Q 2: Must a taxpayer pay self-employment tax on the income received from a state agency to care for their grandchildren so that their daughter can work? Taxpayer doesn't have a day care business or look after any other children. Taxpayer receives Form 1099-MISC from the state agency with the amount paid shown in Box 3 as other income.

A 2: No, the taxpayer does not owe self-employment tax on amounts reported on the 1099-MISC they received from the state agency if they are not engaged in the trade or business of providing day care services, as appears to be the case in this situation. The taxpayer must report the full amount of the payment on line 8j of Schedule 1 (Form 1040), Additional Income and Adjustments to Income .

[KrisD15]

If you enter it on Schedule 1 line 8j, it would be taxable (no, not self-employment tax, but yes, income tax) and VA benefits are never taxed. VA benefits should not have been reported on Form 1099-MISC. 

[itr674]

I forgot to include, the amount is on a 1099-NEC, and in box 1.

We thought it was

1.   reportable family caregiver income as regular taxable income,
2.   but not for profit, and not connected to any business,
3.   so not reportable as self-employment income, because of a and b above.

So, it seems we are back to reporting it on Sch 1 box 8z.  This should allow us not to have to use Sch C, Sch SE and 8995.

We can call VA, and ask them to take the 1099-NEC back, but I'm pretty sure they will say no.

[Vanessa A]

When you walk through to enter your 1099-NEC since this is not income subject to self-employment taxes, after you enter your 1099-NEC you will be asked if any of these uncommon situations apply.  You will select, this is not money earned as an employee or self-employed individual.  It is from a sporadic activity or hobby (this is not common).  This will put it on schedule 1 box 8z and not have it subject to SE Taxes or be reported on Schedule C.  Be sure to select that box the first time after entering the 1099-NEC or a Schedule C will be generated.  

If you already entered the form and it is on Schedule C, go back to the 1099-NEC summary page and delete that form and then re-enter making sure to check the box that it is not income as an employee or self-employed. 

[itr674]

Copy all and thanks for reply.

Just for testing, I had entered the 1099-NEC two different ways in Turbotax, and it was pretty interesting how it built them both exactly.

Double checking now to make sure I have deleted all my testing data, and then will follow instructions above to  enter correctly.

[itr674]

Clarification:

When you say walk through adding 1099-NEC are you saying enter it by

1. Walk me thru everything > Other Common Income > Income from Form 1099-NEC > Update

Or

2. View > Forms > Open Form > in search bar enter 1099-NEC > then select 1099-NEC Worksheet > Open Form > then input the Payer’s Name > then Add Form and then enter data in all applicable boxes.

Or, does it not matter?

[itr674]

Disregard, I followed your instructions by using "Walk Me Through" and it looks like it worked!

No Sch C, yay!

Although, I wish there was a way to get "Family Caregiver from 1099-NEC" on Sch 1 Line 8z instead of "Nonemployee compensation from 1099-NEC".

Seems like when I "added" the 1099-NEC when in the "View" mode I was able to put "Family Caregiver" in the box, but I also think it generated a Sch C, so, I better leave it alone...