The California Legislature enacted the California Earned Income Tax Credit (CA EITC). Pursuant to IRS Notice 2014-07, Qualified Medicaid waiver payments (which include some IHSS payments) are considered difficulty of care payments and not includible in federal gross income.

What qualifies as a dependent in California?

Your qualifying person is your birth child , stepchild , adopted child , or eligible foster child . You paid more than one-half the cost of keeping up your home for the year. Your home was the main home for you and your birth child, stepchild, adopted child, or eligible foster child for more than half the year .

Do you have to pay tax on difficulty of care?

Hi, I have received a 1099misc from the state for income in box 6, health care payments, this is for difficulty of care payments, which are tax free income. I take care of 2 disabled adults in my home … read more I am being taxed because I received pay for caring for my disabled adult child.

Is the difficulty of care payment excludable from gross income?

A1. Whether the Service will treat payments under a state program other than a state Medicaid Home and Community-Based Services waiver program as difficulty of care payments excludable from gross income will depend on the nature of the payments and the purpose and design of the program.

How does the difficulty of care exemption work?

The Difficulty of Care exemption exempts income from caring for a person living in the same home from being included as Gross Income. Highlights: 1. If the “provider of care” lives with the recipient of care, then their income is NOT part of their gross income.

Can a care provider exclude payments from a care recipient?

By contrast, an individual care provider may not exclude direct payments from a care recipient who pays part or all of the cost of the recipient’s care with the care recipient’s private funds. Q8.