I ask because state and federal taxes are not deducted from my paycheck. Note: Deducted are FICA, Medicare, SDI, and Dues. This is my only income and I receive a W-2.
My sister in law gets IHSS W2 and they only took out federal withholding. They did not take out anything else like FICA, etc. But they (California) just changed it in 2016 so I don't know if she will still be getting a W2 at all or just not have any federal withholding taken out. What state are you in?
You better check with the people who pay you and send you the W2. My SIL W2 has all zeros in for SS and Medicare.
California IHSS payments do fall under IRS Notice 2014-7 and are now excluded from income. See this IRS letter dated March 1, 2016 <a rel="nofollow" target="_blank" href="http://www.cdss.ca.gov/cdssweb/entres/pdf/IRSNotice.pdf">http://www.cdss.ca.gov/cdssweb/entres/pdf/IRSNotice.pdf</a>
I made some notes about how to enter it. There are a couple ways to enter a W2 for IHSS wages.
1. Enter the W2 as normal wages on line 7.
Then make an entry on 1040 line 21 Other Income to offiset it by going to
Federal Taxes
Wages and Income
Choose Jump to Full List -or I'll choose what I work on
Scroll way down to the end - Less Common Income
Click start or update next to the last one "miscellaneous income"
Then the last one for Other Reportable Income
For description enter “Notice 2014-7” . Enter the amount with a minus sign (-) in front of it.
2. Or when you enter the W2 it gives you the EIC credit for it (which would be wrong) see this FAQ
<a rel="nofollow" target="_blank" href="https://ttlc.intuit.com/questions/2635384-qualified-medicaid-waiver-payments-on-a-w-2-show-as-earned-income-for-eic">https://ttlc.intuit.com/questions/2635384-qualified-medicaid-waiver-payments-on-a-w-2-show-as-earned-income-for-eic</a>
So you either completely exclude the W2 from your return or enter it under Miscellaneous Income. To enter it as Misc Income use the same steps as above and you will make 2 entries.
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.
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.
Then if your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Estimates and Other Taxes Paid, or Other Income Taxes Paid as Withholding not already entered on W-2.
Thank you. I will use your instructions to file my amended since I received EIC.
If no SDI and Medicare are deducted, does that mean I won't receive Social Security credits?
Right.
Did you already file 2015 and need to amend it? Did you get a letter from the IRS about the EIC?
I filed not knowing of rule change since I was only notified this month from IHSS w/my latest timesheet. I was not contacted by IRS.
To confirm again...with this new rule, I shouldn't have had any deductions, except federal withholding?
Not even federal withholding. Nothing should be deducted. What was the letter from IHSS about? I may need to tell my sister about it. What's IHSS saying now?
<a rel="nofollow" target="_blank" href="http://www.cdss.ca.gov/agedblinddisabled/PG5103.htm">http://www.cdss.ca.gov/agedblinddisabled/PG5103.htm</a>
The info on that page is what I received as a letter. According to it, I can't amend.
Thanks for that link. I'll check with my sister. That means they won't amend or change the prior W2s. But you can still amend your tax returns to take off the IHSS income. I just amended my sister's returns for 2013, 2014 and 2015.
Thank you for your help! Just trying to do things correctly, but they made it so confusing...
In my case, I get IHSS in California for my child who lives with me (my pay-stub shows zero deductions in all categories) I recently received notice from DSS that IHSS wages are not considered part of gross income for both Federal and State Tax Purposes. As a result, I filled out the SOC Form 2298. I just completed my taxes without even waiting to see if I get a W2 from IHSS (I don't expect I will) . However, if I do get a W2 from IHSS I'll just ignore it until I get a notice from the IRS asking about it. At that point, that letter from DSS and IRS Notice 2014-7 is all the documentation I will need to show the IRS that my taxes were filed correctly.
***Edit 1/29/17: So I did end up receiving a W2 for 2016 IHSS after all.....apparently the SOC Form 2298 that I recently filled out in December 2016 will apply to FUTURE wages and thus its not retroactive.
It is mandatory that you exclude the wages from your tax return.
It's technically not necessary to submit the certification, but then your W-2 may be wrong and getting your tax return to be correct is more difficult, so it is far easier to submit the certification.
In a few situations, the certification could even save you FICA taxes. However, that is not always the case.
I JUST SUBMITTED THE NON TAXABLE INCOME REQUEST AS A LIVE IN. I WOULD LIKE TO KNOW , READING THE THREAD, IF I UNDERSTAND CORRECTLY? IT IS "NOT" RETROACTIVE? SENT IN 2020, SO I MUST REPORT FOR 2019? THE SOCIAL WORKER STATED I`AM CONSIDERED LIVE IN, SINCE I`AM HERE 3-4 NIGHTS A WEEK AND RECEIVE MY MAIL HERE. I WORK FOR MY FATHER? NOT SURE HOW HE CAME TO THIS CONCLUSION, BECAUSE I STILL PAY RENT ELSEWHERE.
I`D LIKE TO HEAR FROM A PROFESSIONAL , PLEASE. I NEED TO FILE TAXES ASAP, I LOST MY OTHER JOB DUE TO COVID, SO I NEED THE RELIEF MONEY
I BACK DATED THE FORMS, 1 FOR MY MOM, AND THE NEW 1 FOR MY FATHER. PLEASE READ CAREFULLY BEFORE RESPONDING
THANK YOU
I cant get the form to load you are talking about. Can you help me get the link? Everyone I speak to doesn't seem to know what we are talking about when it comes to IHSS and not paying taxes. Please help me. TIA
Here's the IRS Q&A about IHSS
https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income
1st, you must submit the form SOC 2298 and be approved.
The recipient must be living with you or with them. If you are part time living with them per IRS it is taxable income and you do not meet the criteria. Because the provider maintains and has a separate home/tax home.
Note: be careful putting down you are Live-In when you're clearly not. These forms are usually sent my IHSS to recipient/provider they know lives with together like a child/parent.
If anyone fills out the form without checking with IHSS that can jeopardize the Recipients' benefits as they have them living separately or independently.
Here's the CA IHSS
https://www.cdss.ca.gov/Portals/9/FMUForms/Q-T/SOC2298.pdf
Also as of 2019 IHSS has stopped providing W2 to live-in provider so there's no need to make manual adjustments on "other income". If you continue to receive W2 and has Fed/SS/medicare/state withholding it's either you never met the criteria to begin with or you never filled out SOC2998 forms.
Make sure that in the original application you are living with them or they are living with you. If all of a sudden you say Provider/recipient lives together when the social worker does not have this info, that can raise issue with IHSS hours and guardianship all because you just want to save in taxes. Many are cheating and saying this which is why since 2019 those who meets the qualifications no longer receive W2 due to the blatant fraud.
Note: you can amend the tax returns if you meet the criteria considering the 3 year statute of limitations.
It's one thing to follow IRS regs, it's another rule for government benefits!
I want my federal fica ss all taken from my pay I need social security retirement How do I get this done
What you want is not possible with your situation ... https://ttlc.intuit.com/community/tax-credits-deductions/discussion/ihss-live-with-client-have-for-17-years-o-don-t-want-fica-ss-and-federal-taxes-taken-out-of-my/01/2741435