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My wife and I are Caregivers and provide personal care

Hey, my wife and...

Hey, my wife and I are Caregivers and provide personal care services for my adult son and he lives with in our home. he is on the Individual options (I.O.) Waiver .Is that income non-taxable under IRS Notice 2014-7?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

If we are , how is that noted on the tax form?

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Answered in 4 minutes by:
3/8/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,261
Experience: Taxes, Immigration, Labor Relations
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Yes - you may exclude that income from gross income for income tax purposes.

Please verify how that income is reported?
Are you getting W2 form?

Is that amount included into box 1?

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Customer reply replied 5 months ago
I get a w2, and yes it is in box 1
Customer reply replied 5 months ago
how and where do I report and credit on the tax form?

That is not a credit - but an adjustment.

Please stay with me - I am looking for information how to report that adjustment.

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Customer reply replied 5 months ago
ok

That is exclusion allowed under section 131.

The notice you mentioned is here

https://www.irs.gov/pub/irs-drop/n-14-07.pdf

This notice advises taxpayers that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver program are difficulty of care payments excludable from gross income under § 131 of the Code. The exclusion may apply whether the care provider is related or unrelated to the individual receiving care.

.

If these payments are paid to you in box 1 of form W-2 (they should not), first try to get a corrected Form W-2 from the payer.

If you cannot get a corrected Form W-2, follow these steps

- report W2 income in box 7 as usual

- on line 21 - report that amount as negative amount specifying "Notice 2014-7" to the left of that line.

That will exclude that amount from AGI - adjusted gross income and will provide the IRS with a reason of that exclusion.

Let me know if that works for you.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,261
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 5 months ago
Thanks
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