How to Exclude IHSS Income from Taxes

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Art: Robin Mead

This page is a work in progress. Please include your suggestions and ideas in the comments below.

Do I Pay Taxes on My IHSS Income?

If you live with your client, your IHSS income is exempt from taxes.

If you do not live with your client, it is not exempt and you will pay taxes.

This is because of a special IRS regulation called difficulty of care income tax exclusion.

How To Exclude IHSS Income

Instructions from the IHSS Guide for Advocates:

IHSS wages received by IHSS providers who live in the same home with the recipient of those services are excluded from gross income for purposes of federal and state income tax. A live-in provider must fill out an SOC 2298 Live-In Self Certification Form for Federal and State Tax Wage Exclusion in order to receive this benefit. If the provider prefers to pay taxes out of their check, they do not have to file the self-certification form.

How to File Taxes

From intuit, this article explains How to Report Excluded Income on your tax forms.

Child Tax Credit and Earned Income Tax Credit

If you do not pay taxes on this income, can you still get an earned income credit? And child tax credit? There is not (yet) a published IRS regulation on this topic. However, in this court ruling, it was found that tax credits can be claimed.  Please consult with your accountant on next steps.

Reader’s Tip

IHSS payments can still be included on taxes and excluded from ‘gross income’. This is critical because they still can affect the tax credits or other tax-related matters, such as qualifying income for contributing to a Roth IRA.

Oh No! Taxes Were Already Taken Out!

If you are a live in provider and you paid taxes in the past (and now realize you should not have), it’s not too late: How to Amend Past Taxes

Thanks for Reading

Learn more about: How Can I Get My IHSS Income Excluded from SSI? Medi-cal? CalFresh? Taxes? HUD? Housing Vouchers?

 

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