Difficulty of Care Income

[hjsteele06]

We get difficulty of care payments but do not receive a 1099 or W-2 since it is tax exempt. Do I report the income and if so where?

[ColeenD3 · Accepted solution]

No, you do not have to report it. Many people do receive the reporting forms and then have to jump through hoops to turn around and exclude the income.

[Bsch4477]

You don’t have to report it but since it is considered earned income it might benefit you by qualifying you for benefits like earned income credit or IRA contribution eligibility. If those are possible for you, you should ask for payment documentation. 

[hjsteele06]

We have a household employee to help us be able to provide the care that the 3 boys require and that is where the issue comes in. It looks like we don't make enough "claimed" income to pay her when obviously we do.

[PattiF]

As ColeenD3 said above, you do not need to use the Difficulty of Care income in your tax return as it is Excluded income.

This IRS Notice discusses the exclusion.