IHSS income as a live-in provider

[CatinaT1]

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.   

I assume you want to claim the income for Earned Income Credit purposes. I would try both with and without this income to see the better outcome.

   

Since you do not have information on a W2, here is how you will enter it.:   

1. Click on Wages and Income at the top of the screen 
2. Scroll down to "Less Common Income";   
3. click on Show More;  
4. click on Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C;  
5. click on Start or Revisit next to Other income not already reported on a Form W-2 or Form 1099;  
6. Did you receive other wages, say yes;  
7. Wages earned as a household employee, leave blank and click continue;  
8. Sick or disability pay, leave blank and click continue;   
9. The next question asks about non-taxable Medicaid waiver payments; enter the amount here,  
10. Click Continue.   

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

[npalmer4]

In order to be able to not pay taxes on the live in provider income you must certify via the timesheets website the certification. That must be filled out and on file for them to not take taxes. 

[milehi99]

I'm new to this site and apologize for going off on a slight tangent but it seems I may be close to getting my questions answered based on the very specific topic being discussed.  Im in Colorado and do pretty well taking care of my 88 yo mom. 1100 per week. Questions:  Can I choose whether or not to categorize this income as earned or unearned? Can I do a little of both? what are the pros and cons of each? Why do some folks get a 0 on their W2 in box 1 and why do some get an actual number? Does SSA count IHSS income as income whether its earned or unearned when determining eligibility for SSDI? Is IHSS Caregiving considered SGA by SSA in the first place?

[JotikaT2]

The type of form you receive may be determined based upon your state of residence.  You might get a W-2 form or you might be issued a 1099 form.  This link provides details on how to report this information in TurboTax based upon the specific form you actually received. 

If you reside in the home where you are taking care of your mom, then these payments are not taxable.  However, if you reside in another home, then the payments would be considered taxable income.  Please see Certain Medicaid Waiver Payments FAQs from the IRS for more specific situations to determine how the income is taxed based upon your circumstances.

Also, this income while potentially not taxable, can be considered earned for purposes of claiming credits such as the Earned Income Credit.  The steps to determine whether you qualify are included in the first link provided above.  You will essentially answers questions in the Deductions and Credits section of the program to include the IHSS income for purposes of calculating any credits.

If your IHSS payments are considered to be nontaxable, then the payments would not affect your SSDI as they would not be considered to be earned income.

In regards to your inquiry for substantial gainful activity (SGA), please see this link for the amounts you can receive in order to keep your existing benefits.

@milehi99