Level 1

Notice 2014-7 for S-Corp

Forum|Forum|1 year ago
February 28, 2025
2 replies
12 views

Hi!

TP is a sole proprietor providing home care services and was previously showing and excluding the income in his Schedule C using the instructions from Q14 https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income

The business was approved as an S-corp in 2024 but the situation is still the same - owns only 1 home and he lives with the patients in that home. Does Notice 2014-7 still apply and can he exclude the income similar to how it is done on Schedule C?

Assuming it does and 100% of the income is excludable, can he claim operating expenses resulting in net losses?

Thank you!

T

Terry53029

Intuit Community Champion

Only the W2 wages of the owner would be excluded, as an entity does not live in everyone's home nor care for anyone. Just my thoughts, and I have not researched whether 2014-7 applies to corps. doesn't seem to me that it would

qbteachmt

Level 15

Why did the person create the S Corp? That requires a routine reasonable wage be paid.

Are the parents the people being care for, and under a service plan? Are there other people being cared for, elsewhere than the carer's own home?

Example:

Taxpayer lives with a disabled parent or sibling in the same home and is paid under a care plan. Taxpayer also has another person to care for, going to that person's house a few times a week. Since your taxpayer now is an Employee, they get paid through payroll for all of this, but the pay for the work in their own home for their relative would qualify for the exclusion.

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