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.