In Home Support Services (IHSS) and Your Taxes
What You Need to Know about In Home Support Services (IHSS) and Your Taxes
IHSS is another acronym you need to know about in our special needs world.
Our son, Tim, became eligible for Medi-Cal when he was 20 years old and was living at home. Your young adult may become eligible at 18 or a younger age but by age 20 unless they have a good job and earnings or other assets they should be able to qualify for Medi-Cal. Tim is also covered on Medicare and our private insurance so MediCal is really a tertiary payer for health insurance. So the main reason we signed up for MediCal is this makes him eligible to receive In Home Support Services or IHSS.
IHSS provides payments for a caregiver to help him with his daily activities of living, such as grocery shopping, meal prep, house cleaning, bathing, toileting and transportation to medical services.
For a few years we received about 80 hours a month to provide these types of services for Tim. We had to go to an orientation class, fill out paperwork and get fingerprinted in order to be paid as his caregiver. Even as his parents we had to pay for fingerprinting to be done!
Each year, his caseworker comes to the home to meet with Tim and determine the level of care needed. Unexpectedly, the caseworker decided that Tim would probably qualify for protective services since he can not be left home alone safely since he would open the door to strangers, is unable to call 911 in an emergency and might wander off if left alone. She gave us a form for his doctor to fill out which asked for his mental capacity and judgment abilities. The doctor filled it out and it was approved and we now get over 200 hours a month to provide a safe place for Tim to live.
These monies are paid by the state and are meant to keep people from being institutionalized or placed in residential care facilities which are very expensive placements for the state to provide. You can also have other people provide these services if you are unable to do so.
IHSS funds are also available to parents of minor children who qualify for MediCal before age 18. So, you can be paid to stay home and care for your special needs child. You can check with IHSS or your regional center caseworker for eligibility requirements.
This website/blog has useful information and has a lot more details:
We also just learned that the IRS has determined that these payments are no longer considered taxable income if the person is living in the same household as the provider.
I received this email which alerted me to this:
Federal Income Taxes on In-Home Supportive Services (IHSS) Wages
CA Dept. of Social Services News Release March 16, 2016
IHSS Providers: Be sure to check on your need to pay taxes this year!
SACRAMENTO – The Internal Revenue Service (IRS) has informed the California Department of Social Services (CDSS) that the IHSS wages received by IHSS providers who live with the recipient of those services are not considered part of “gross income” for purposes of federal income taxes. Approximately 53 percent of California’s 400,000 IHSS providers live with at least one of the recipients they serve. The wages of these providers are considered to be “difficulty of care” payments, and thus are exempt similarly as are foster care payments for the care and supervision of a child. These wages remain subject to withholding for social security and unemployment.
As a result of the timing of the IRS letter, the W-2 forms mailed to IHSS providers for the 2015 calendar year do NOT reflect this IRS guidance, and therefore DO reflect federal income tax withholding for certain providers, and may require providers and recipients to identify when they live together in order to appropriately withhold federal income tax from applicable IHSS wages. This effort also will be coordinated with labor organizations representing providers, to ensure providers are informed of this IRS opinion.
The Department makes this announcement solely as a service to IHSS providers. The Department does not provide tax advice, and the full IRS letter therefore is being made available only to inform and assist taxpayers. IHSS providers with questions about this IRS opinion are encouraged to consult with a tax advisor. The link to the IRS letter to share with your tax advisor is:
We had been paying taxes on this income so I did file amended returns with the IRS and CA Franchise Tax Board and have received several years of back tax refunds.
We hope this information helps other families to care for their children/adults and have less financial stress while doing so!
Mary and Roger