IHSS Income No Longer Federally Taxable

In Notice 2014-7, effective January 3, 2014, the IRS states that the income families receive from IHSS as a result of a Medicaid Waiver by providing in-home care to a disabled person is NOT federally taxable. Furthermore, according to Victoria Driscoll of the IRS, this is meant to be retroactive. That means, if you’re just discovering this new tax law, you should be able to amend your federal taxes from the past 3 years. For more info see Providers’ IHSS Income Not Federally Taxable on IHSSadvocate.com.

NOTE: This article is for educational purposes only. For questions relating to a specific situation please contact a qualified tax professional.

What does the info above mean for you? Example; If you have a child with a disability and you get IHSS income, up until January 3, 2014 you had to claim this income on your taxes. Now that you do not have to claim this income, for many families that translates to a higher tax refund. So amending your taxes could mean that you get money back from the government. For some of the families RFENC serves that has meant thousands of dollars!