rubotax Posted August 12, 2014 Report Share Posted August 12, 2014 I'm planning to amend (going back 3 years) and exclude IHSS income for many of my clients if they can get tax refund. One question that I have, which is not clear to me when I reviewed IRS's notice 2014-7, is if IHSS income for non-relatives can be excluded as well. Also, if I understand correctly we can exclude IHSS for the state of CA as well. Thank in advance. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted August 12, 2014 Report Share Posted August 12, 2014 Maybe these links will help you: In general, income not taxable, relative & nonrelative: http://www.tacanow.org/news/ca-only-qualified-medicaid-waiver-payments-not-subject-to-federal-tax-in-2014/ and this one: http://www.ihssadvocate.com/news/ihss-income-not-federally-taxable From the 2nd link above: Accordingly, as of January 3, 2014, the IRS will treat qualified Medicaid waiver payments as difficulty of care payments excludable from gross income and this treatment will apply whether or not the care provider is related or unrelated to the eligible individual. The IRS will no longer assert the Alexander, Bannon, or Harper cases. Nor will it assert the position taken in PMTA 2010-07. About the 3 year look-back, clarified amending instructions: http://ihssadvocate.com/news/irs-notice-2014-7-clarified-amending-instructions Short article from a CPA: http://ihssadvocate.com/news/notice-2014-7-explained-by-regina-levy-cpa#overlay-context=news/irs-notice-2014-7-clarified-amending-instructions IRS Q&A re IHSS: http://www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income Maybe one of the other CA preparers on here will answer about the state's handling. 1 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted August 12, 2014 Report Share Posted August 12, 2014 I found this site for you that gives a reference to a CA FTB publication that may give you the answers to the CA taxation of the IHSS: http://www.sbsnap.org/profiles/blogs/ihss-and-respite-income-exception-irs-and-ca-taxes From that site: IHSS and Respite income Exception IRS and CA taxes IHSS and Respite Incomehttp://www.tacanow.org/news/ca-only-qualified-medicaid-waiver-payments-not-subject-to-federal-tax-in-2014/ " Taxpayers may exclude payments defined in Notice 2014-7 from taxable income in 2013. They may also file amended returns for any return open under IRC section 6511. That code sections means any return filed within the past 3 years. Please note, IRS Notice 2014-7 mentions both IHSS and respite payments."IHSS income can be amended for California state taxes as well. See FTB Publication 1001 on page 3 discusses IHSS income. It is amended on Schedule CA. This has been in effect before the IRS came out with their notice 2014-7. 1 Quote Link to comment Share on other sites More sharing options...
rubotax Posted August 12, 2014 Author Report Share Posted August 12, 2014 Thanks Judy! These are really helpful. RV Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted August 12, 2014 Report Share Posted August 12, 2014 Judy, YOU ARE A STAR!!! Quote Link to comment Share on other sites More sharing options...
jklcpa Posted August 13, 2014 Report Share Posted August 13, 2014 No, lol. I just had a little time to help, and I learned something from it too. A win-win. 1 Quote Link to comment Share on other sites More sharing options...
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