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Level 1

How to report wages earned as a caregiver for my daughter who lives at home if she works and we don’t declare her as an dependent?

"Qualified Medicaid waiver payments. Certain payments you receive for providing care to an eligible individual in your home under a state's Medicaid waiver program aren’t included in your income. These payments may be excluded from your income whether or not you're related to the eligible individual receiving care.”

The wages are as a result of her being under a Medicaid waiver - to the wages are for doing her paperwork, bookkeeping and making other arrangements for work, medical care and food preparation, meal planning etc.

I was sent a W2 but don’t know the process for claiming (or excluding those wages).

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Level 1

How to report wages earned as a caregiver for my daughter who lives at home if she works and we don’t declare her as an dependent?

Medicaid Waiver Payments for In-Home support services are excludable from gross income and should not be includedin your earned income.

Since these payments are paid to you in box 1 of Form W-2 (they should not), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, follow these steps:

  • Exclude these payments from your return:
    Do not include this W-2 in your return. The IRS may contact you to explain why the payments were not included on your tax return.
    You can explain that the payments are excludable from gross income under Notice 2014-7 as payments for In-Home support services.
1 Reply
Level 1

How to report wages earned as a caregiver for my daughter who lives at home if she works and we don’t declare her as an dependent?

Medicaid Waiver Payments for In-Home support services are excludable from gross income and should not be includedin your earned income.

Since these payments are paid to you in box 1 of Form W-2 (they should not), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, follow these steps:

  • Exclude these payments from your return:
    Do not include this W-2 in your return. The IRS may contact you to explain why the payments were not included on your tax return.
    You can explain that the payments are excludable from gross income under Notice 2014-7 as payments for In-Home support services.