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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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I received payment son do i have to pay self

Customer Question

i received payment for caring for my son do i have to pay self employent taxes
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
Hi and welcome to our site!
Is your son disabled?
Who paid you for caring for your son?
Expert:  Lev replied 1 year ago.
I assume that you are paid for providing care to qualified disabled individual as difficulty-of-care payments.
That is your income - but that payment is specifically excluded from taxable income.
So - that payment is NOT counted when you apply for ACA insurance tax credit.
.
here are two types of payments that are excluded form income tax. - providing care to qualified foster individuals AND difficulty-of-care payments.
Difficulty-of-care payments. These are additional payments that are designated by the payer as compensation the additional care that is required , mentally, or emotionally handicapped qualified foster individuals. A state must determine that the additional compensation is needed, and the care the payments are made must be provided in your home.
.
Please see IRS publication 525
http://www.irs.gov/pub/irs-pdf/p525.pdf
page 31 - left column -
.
Previously IRS held position that such income is NOT taxable if the taxpayer cares person and taxable if that person is related to the taxpayer.
HOWEVER - not long ago - the IRS changed that position
see here -
http://www.irs.gov/irb/2014-4_IRB/ar06.html
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, described in this notice, are difficulty of care payments excludable under §131 of the Internal Revenue Code.
This notice is effective received on or after January 3, 2014. Taxpayers may apply this notice in taxable years the period of limitation on claims credit or refund under §6511 has not expired.
That means - if the taxpayer reported that income as taxable - he/she may amend past three returns and might be eligible for the refund.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.
Let me know if that answered your question.