Notice 2014-7 PURPOSE This notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, described in this notice, are difficulty of care payments excludable under § 131 of the Internal Revenue Code.

When was the IRS difficulty of care notice 2014-7 issued?

On January 1, 2014, the IRS issued Notice 2014-7. The Notice explained that the IRS treats certain payments for personal care services as “Difficulty of Care payments”, which are excluded from federal income taxes.

Can you exempt income from IRS Notice 2014-7?

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. Under this Notice certain Medicaid waiver payments are treated as difficulty-of-care payments when received by an individual care provider for care of an eligible individual (whether related or unrelated) living in their home.

Do you have to be a relative to claim notice 2014-7?

IHSS is not an authority on whether one must be a relative to claim Notice 2014–7. In fact, it was originally concluded a relative would NOTbe able to claim the Medicaid waiver. Not until the tax court ruled to include relatives.

Where do I put notice 2014-7 for Medicaid?

The taxpayer should then report the excludable amount as an expense in Part V of Schedule C, and write “Notice 2014-7” next to that amount. Regardless if these amounts are reported on a W-2 or a 1099-Misc, these amounts are excludable from income and they are not self-employment income and are not subject to self-employment tax.

When did the IRS issue notice 2014-7?

On January 3, 2014, the IRS issued Notice 2014-7 addressing the income tax treatment of certain payments to an individual care provider under a state Home and Community-Based Services Waiver (Medicaid waiver) program.