I don't know where to enter the IHSS tax exempt for IRS

If you do not receive a W-2, you do not have to do anything.  

However, see the following to report the W-2 and then take off the income as non-taxable.

https://ttlc.intuit.com/replies/4360071

Thank you, Nancy G!

I have the same issue, but my problem is how do i report this in my Calif State return?
My IHHS W-2 indicates box# 16 amount, How do i make this amount non taxable in my State tax return?
any help is appreciated

Does all IHSS income fall under this exception?

Can you describe what income you're referring to? If you are a parent provider or the recipient lives in your home then it is exempt.

The IHSS income would not be exempt if you are working as a provider to a recipient not living in your home.

This does  not help. The income IS exempt but FICA etc were deducted and PAID IN.

If you are asking if IHSS payments are taxable, this depends on whether the provider lives with the recipient of the services. Per IRS Notice 2014-7 and the California Department of Social Services, wages received for In-Home Supportive Services by providers who live with the recipient of those services are not considered part of gross income for federal or state income tax purposes. 

 

If you are asking how to report IHSS payments on your tax return, this depends on several factors:

 

• If you did not receive a W-2 or other tax form, you do not need to report the payments on your return. These payments are specifically exempt from income tax.

• If you received a W-2 or other tax form (such as a 1099), you should enter the information in TurboTax and then show an offset for this entry so that you will not be taxed on this income. By entering the information into TurboTax, you will reconcile your tax return with what the IRS has received and then show the corresponding offset to explain why it is not taxable. (Please see the steps listed below.)

• You can also choose to report the payments as earned income in order to receive the earned income credit or other credits, even if you did not receive a W-2 or other tax form. In a recent court case, it was ruled that Medicaid Waiver Payments and IHSS payments are considered "earned income" for purposes of calculating the earned income tax credit and other credits.  

 

Here are the steps to enter your IHSS payments in TurboTax:

 

1. Log into TurboTax and click on any topic to continue
2. Click on Federal from the menu on the left-hand side and then click on Wages & Income at the top
3. If you choose to report your payments to receive a credit: Click Edit/Add next to Job (W-2) and then click on Add a W-2.
4. If you actually received a W-2 for your IHSS Payments, enter the information as reported on your W-2. Enter the amount you received for IHSS Payments in Box 1 (even if this amount is not reported in box 1 of your W-2.)
5. If you did not receive a W-2, per IRS Form 1040 Instructions, you may still enter the amount of IHSS Payments in Box 1 for the purpose of claiming the credit.
6. If you received a 1099 and choose not to report it as earned income to receive a credit: Scroll down to "Less Common Income" and click on Show More.
7. Click on Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C. Then click on Start or Revisit next to Other reportable income and select Yes
8. Enter "In-Home Supportive Services Payments, EIN # (enter EIN number from 1099)" in the description box and then enter the amount from your 1099. Click Continue.
9. To enter the offset for the payments (whether you chose to report as earned income or a 1099): Click on Wages and Income at the top. Scroll down to "Less Common Income" and click on Show More. 
10. Click on Start or Revisit next to Miscellaneous Income and then click on Start or Revisit next to Other Reportable Income and select "Yes" or "Add Another Income Item" if applicable
11. In the "Description" section, enter "IRS Notice 2014-7 excludable income" and in the "Amount" section, enter the W-2 box 1 amount (or amount of IHSS Payments) as a negative (-) number

 

@cstrausnew

 

 

Hi BarbaraW22, 

 

I followed your instructions but noticed I still have a refund amount for both my state and federal. Is that common when the income is an excludable income? I I just want to make sure I am doing it right. 

 

• Entered total wages from box 1 and box 16 on my W2. 
• Then Followed steps 9-11 of your instructions to enter the offset for the payments. 
• Added "IRS Notice 2014-7 Excludable Income" as the description and added a negative ( "-") in the amount section before the wage amount from box 1 on my W2.  

for FYI purposes: I am currently a IHSS care giver for someone who lives in my home and did receive a W2. 

 

Hello,

I tried to follow your advice and using Turbo Tax Premiere for 2019. When I clicked on "Other Reportable Income", it takes me to "Other Taxable Income" along with "Enter a brief description and amount for any item of miscellaneous taxable income you received in 2019". It then asks me Description along with amount but does not have a box to enter EIN. 

When I enter the amount, it is considering as taxable and increasing my tax due.

 

Please help.

Thanks,

 

Krishna.

I received a W-2 but I live with the recipient.  Should I still enter it? How do I make that income exempt? It raised my federal amount owed a lot. 

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@Danasj wrote:

I received a W-2 but I live with the recipient.  Should I still enter it? How do I make that income exempt? It raised my federal amount owed a lot. 

---

Your post does not make sense.   If *you* received a W-2 then you are the recipient.    If your name and SSN is not on  the W-2 then *you* cannot receive a W-2.

 

If someone else received the W-2 then  it does not go on your tax return, it can only go on their own tax return.

I received income from Ihss for being a caregiver to my mom that lives with me. I've heard this income is exempt but I did receive a w-2. How do I claim this on my 1040? 

---

@Danasj wrote:

I received income from Ihss for being a caregiver to my mom that lives with me. I've heard this income is exempt but I did receive a w-2. How do I claim this on my 1040? 

---

If the W-2 is filled out correctly by the issuer box 1, 2, & 17 should be zero or blank and the W-2 is not entered into TurboTax at all.

I have the same issue. I was taking care of a family member who lived in our home and my w2 for ihss does not say zeros it has numbers in all those spots. How would I fill this out to file my taxes?!

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. This Notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, are difficulty of care payments and excludable as income. 

 

If 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: Do not enter the W-2 in the Wages & Salaries topic. Instead enter it as Other Reportable Income under the Miscellaneous Income section. Take the following steps: 

1. Sign in to TurboTax Online, click Continue your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);

1. Click on Federal Taxes at the top of the screen;
2. At the bottom of Your Income box pick the option in blue to help me add other income, then jump to full list;
3. Scroll down the page to the last section titled: Less common Income and click show more;
4. Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
5. Scroll down to the last option titled Other reportable income and select start or edit;
6. When it asks, "Any other reportable income?" say yes then you will make two entries:
7. Your first entry description would be W-2 EIN # (enter EIN number from W-2) Box 1 Medicaid Waiver Payments, and enter the Box 1 amount as a positive number.
8. Next you click "Add Another Miscellaneous Income Item," and enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number. 

This both shows and explains removing the W-2 income, placing a zero on Line 21 of your Form 1040. 

 

If your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Other Income Taxes as Withholding not already entered on W-2.

 

For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.

Thank you for this information. I'm not seeing where to enter the offset information under Review and don't see a place for Miscellaneous Income either. I gather the website has been revised since last year. Can you help?

Yes. Enter your W-2 as usual like any other W-2.  Next follow these steps to complete the action of removing this income from your return.

1. Scroll down the page to the last section titled: Less common Income and click show more;
2. Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
3. Scroll down to the last option titled Other reportable income and select start or edit;
4. When it asks, "Any other reportable income?" say yes then you will make one entry
5. Enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number

When you return to the Wages & Income page, scroll to see the negative income beside Miscellaneous Income, 1099-A, 1099-C; This will remove the income on your return for the IHSS or other payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver program.

Hi, I also received a W-2. I have my own house but currently living with the recipient 24/7 for the last two years.   Does that make the income exempt? Thank you!!

Were you told that your payments would not be taxable income under IRS Notice 2014-7?

 

IRS Notice 2014-7 can be found at this link.  Click on the hyperlink Notice 2014-7 in the center of the page.

 

Certain Medicaid Waiver Payments for In-Home support services are excludable from gross income and should not be included in your earned income.  This is the case even if you have received a W-2 for performing these services.  Steps are listed above on how to enter this.

 

Be sure to retain all your documentation.  The IRS is likely to ask questions about this income at some later time.

 I have followed these instructions and everything worked.

However, I will not be getting a W-2, and the company says I will not get a 1099, so I do not have a tax id number for them. When attempting to e-file, Turbo Tax returns a message that a tax id number is needed. Is there a way around this, or do I need to do something different?

 

Thank you!

I have followed these instructions and everything worked.

However, I will not be getting a W-2, and the company says I will not get a 1099, so I do not have a tax id number for them. When attempting to e-file, Turbo Tax returns a message that a tax id number is needed. Is there a way around this, or do I need to do something different?

 

Thank you!

I'm trying to file my exempt income without a W-2 as well. Did you figure a way to file yours with TurboTax or did you end up having to file a paper return?

I used turbo tax and entered it in Schedule 1

 

line 8 Other income. List type and amount: IRS Notice 2014-7 excludable income with the description below:

EIN: xxxxxxx - In-Home Supportive Services Payments.

 

The amount on line 8 is the income you received with a

negative sign

.  For example, if you received $500, then enter

-500

. Note the negative sign and is important

 

This amount is then copied by the Turbo tax to line

7a Form 1040

(if you are using it)

 

Good Luck.