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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3171
Experience:  IRS licensed Enrolled Agent and tax instructor
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I was sent a notice from the IRS stating that I owe tax

Customer Question

I was sent a notice from the IRS stating that I owe tax pertaining to payments I received in 2013 I received for providing care to two developmentally disabled individuals who are under the medicaid waiver program in Georgia. The agency through which this service was made is a qualified foster care agency. They gave me a 1099-misc, but fortunately (according how you look at it!) These payments are tax exempt. What exactly do I need from this agency in order to assist me in resolving this situation?
Submitted: 1 year ago.
Category: Tax
Expert:  Peter Griesch replied 1 year ago.

I'd like to assist. What is your theory why these payments are tax exempt?

Expert:  emc011075 replied 1 year ago.

Hi. Another expert here. My name is ***** ***** I will be happy to help you.

You received the notice because your received 1099Misc and didn't include it on your tax return. Here's what you need to do. Get a copy of Schedule C for that year, claim the entire amount as an income and in part V deduct the entire amount as other expense with a note: “Notice 2014-7"

See here question/answer #14: https://www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income

Attach the schedule C to the notice, check the appropriate boxes on the notice that you do not agree with the changes and make sure you do NOT sign it. Mail it back to the address provided on the notice.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.