How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Tax.appeal.168 Your Own Question
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
Satisfied Customers: 3453
Experience:  3+ decades of varied tax industry exp. Tax Biz owner
58285678
Type Your Tax Question Here...
Tax.appeal.168 is online now
A new question is answered every 9 seconds

A I have a daughter that is handicapped fully depended on

Customer Question

A I have a daughter that is handicapped fully depended on me. Our State has a program which will pay me to take care of my daughter and her needs in our home. I am asking is this money tax-exempt or do I have to pay taxes on this money. The Program offering this says there is something called difficulty care or foster care. My daughter is 30 years old depends on me for all her needs. I want to sign up for this program I would like to know the laws about how the taxes work for this. Thank You
Submitted: 1 year ago.
Category: Tax
Expert:  Tax.appeal.168 replied 1 year ago.

In order for me to better assist you, please tell me what state you live in.

Customer: replied 1 year ago.
new mexico
Expert:  Tax.appeal.168 replied 1 year ago.

Based on the following information, the income is not included in your income. SEE BELOW:

The notice provides that the Service will treat these Medicaid waiver payments as difficulty of care payments excludable from gross income under § 131 of the Internal Revenue Code (Code).

REFERENCE SOURCE:

http://www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income

Additional Info:

Difficulty-of-care payments are compensation for providing additional care for qualified foster individuals if the payments are necessitated by the physical, mental, or emotional needs of the individual after the state has determined that the foster care provider needs additional compensation in order to deal with the individual's handicaps. These difficulty-of-care payments are also generally excluded from gross income. However, if the payments are received for more than 10 qualified foster individuals under age 19 or for more than five qualified foster individuals over the age of 18, they must be included in your income. If you receive payments to maintain space in your home for emergency foster care, you must include these payments in gross income. The IRS considers you to be a self-employed person in business as a provider of foster care if you receive foster care payments that must be included in your gross income. -

REFERENCE SOURCE:

https://ttlc.intuit.com/questions/2272834-i-provide-care-for-my-disabled-brother-and-am-told-it-is-tax-exempt-under-the-foster-care-act-i-do-not-recieve-any-type-of-end-of-the-year-form-can-should-i-still-claim-it

Let me know if I can be of further assistance to you regarding this matter.

Related Tax Questions