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?

 

25 thoughts on “How to Exclude IHSS Income from Taxes”

  1. Do I have to even take my W2 form for IHSS and show it to my tax person, since I am a live in provider and I am exempted from gross income?

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  2. Hello. I am my sisters caretaker and she gets IHSS. Since she lives with us we are exempt from taxes. When I was working at my former job we were able to apply a child and dependent care expense (up to 5K) which was tax free (you didn’t have to pay taxes). The IRS rule requires both spouses to be working for this benefit. Since taxes are not taken out for IHSS payments, our return doesn’t show any earned income for me. Your RS ruling above is very helpful. Have you heard if this would apply to child and dependent care benefits. Lastly, THANK YOU for this website. It has been very helpful.

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  3. Hello! Thank you for this information! If the total IHSS income I get as a live-in provider is not reported in my W2 and not included in my gross taxable income, can I still make contributions to my ROTH IRA?

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  4. Thank you so much for posting this information! I am a live-in provider exempt from paying taxes on my wages and I want to make max contributions of $7000 to my ROTH IRA. How do I report my taxes so I can legally do that? My accountant doesn’t know anything about this and I don’t know who to turn to. Appreciate your help! 🙂

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  5. Hi Sleepy Girl,
    I’ve heard that if a live-in provider is a non-relative then they owe no federal or state income tax but still have to pay social security and Medicare taxes while live-providers who are relatives don’t have to pay any taxes. Is this correct or is it misinformation?

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    1. I have read this as well, unfortunately I don’t know the specifics. You might try inquiring more in the IHSS Facebook group… IHSS advocates. Or IHSS consumers and providers united.

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  6. Hi,
    I am a ihss live-in provider, and I would like to know if I’m eligible for stimulus payments, I do have on file a 2298. Self certification status is on file with ihss. Thank you

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  7. HI.. and thank you for this page. Im taking care of non relative adult in my home , and the employer told me that i don have to pay taxes depending on 2014 – 7. SO were can find this regulation or notes please?. thanks

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  8. Hello, I was recently hired as an IHSS provider. I have not filled out my W4 yet. I was told that it is mandatory to NOT have taxes taken out since they are exempt for live in providers. My question is… is it mandatory or optional? I have small children and previously claimed the Dependent tax credit based off my husbands work. My sole income this year is IHSS. Am I able to have taxes taken out so at the end of the year I can file taxes and claim EITC or Dependent Tax Credit?

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  9. Re: IHSS & Child Support Calculations

    IHSS is considered a public assistance program. It’s the child who qualifies, and is issued hours. Hours paid for are considered difficulty of care payments. When a parent is the live-in provider, do the payments received also count “public assistance” & “difficulty of care payments” aka welfare OR is it “income” to the parent?

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  10. Hi:
    Will IHSS employees get stimulus check?
    I am in poverty line income and didn’t file tax return for 2019.
    Thanks

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  11. Hello, I have a question that many people are asking these days by new law.
    Me and my son are disabled and we both are us citizens. My wife is a caregiver to both of us and she is earning money through IHSS. Her green card has been expired and they didn’t extend her residency. She will lose her job and we will have nobody to take care of us.
    Thank you in advance for your advise.

    Liked by 1 person

    1. Is your wife a permanent resident alien? If so, it shouldn’t matter that her green card is expired. Maybe, there are new laws for recent immigrants.

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    2. Una pregunta he trabajado para mi hijo por mas de 18 años con la compañia de IHSS pero solo 6 años miro reportados en mi social security cuenta! los otros 12 estan solo ceros nada reportado de esos años porque???

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