Difficulty of Care Tax Exemption
Greetings, All...hope everyone is doing well. Time flies and another season is basically upon us.
New client called to discuss his return and Difficulty of Care Tax Exemption. I have never dealt with this but did research it a bit and it appears his situation qualifies under IRS Notice 2014-7.
Here is some information he provided to me:
My wife is a W-2 employee of a Medicaid health services provider called - - - - -
She works 20 hours per week at $20/hour.
Her position is funded through a Medicaid Home and Community-Based Services (HCBS) waiver (or similarly structured Medicaid waiver program).
She provides non-medical support services (personal care / in-home support) to a family member, and
The family member lives in our home, where we both regularly live and carry out our normal daily life.
There is a plan of care through the waiver program that authorizes her services and hours.
Based on this information, I believe she does qualify to have her wages excluded. In the research I've done, it suggests the employer should not report taxable wages on her W2 in Box 1. Is that correct? Assuming they do report taxable wages, does anyone know how to exclude the wages? Is there a form or is it simply done through the program?
Would appreciate any insights.
