In-Home Support Services (IHSS) income is given to taxpayers who are providing care to individuals who would otherwise require care in a hospital, nursing facility, or intermediate care facility. The taxpayer providing the care is caring for this individual in their home.
This income is typically reported on a W2, under the state of California the EIN is 20-0548930. It will have the name of the person receiving the care in the area of the Employer’s Name.
Per IRS Notice 2014-7, issued in 2014, this income is no longer taxable. The W2 may or may not have income under Box 1 of the W2.
- If the income under Box 1 is “0” then no action needs to be taken.
- If the income is being reported, the tax preparer needs to zero out that income to ensure it is not taxable by taking the following steps
- Enter the W2 as it is presented on the tax document
- Go to the “Other Income” area on the 1040
- Enter “IHSS INCOME – NON TAXABLE – NOTICE 2014-7” as the description of the “Other Income”
- Put the amount reported in Box 1 of the W2 adjacent to this description as a negative figure
- The 1040 should now show the income reduced to zero.
IRS Resource:
https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income
