IHSS and IRS Notice 2014-7: Federal Rules for Medicaid Waiver Payments in the Inland Empire

IRS Notice 2014-7 provides that certain Medicaid waiver payments are excludable from income for federal income tax purposes. If you receive IHSS payments in the Inland Empire, the key federal question is whether those payments fit the Medicaid waiver payment criteria described in the IRS guidance.

What Counts as a Qualified Medicaid Waiver Payment

The IRS explains that certain payments you receive for providing care to an eligible individual in your home under a state’s Medicaid waiver program may be excluded from your income under Notice 2014-7. The IRS also notes that these payments relate to Schedule 1 (Form 1040), line 8s.

Applying the Federal Rule to IHSS Payments

If the IHSS payments you receive are Medicaid waiver payments for providing care to an eligible individual in your home, Notice 2014-7 indicates those payments may be excluded from federal income. If your payments don’t meet those criteria, the exclusion may not apply. This is a federal income tax rule and doesn’t address state tax treatment.

Where This Can Show Up on Federal Forms

• Schedule 1 (Form 1040), line 8s is referenced in connection with qualified Medicaid waiver payments.
• If you receive a Form W-2 with box 12 code II, that code indicates Medicaid waiver payments excluded from gross income under Notice 2014-7.

Key Takeaways for Inland Empire Caregivers

• Notice 2014-7 is a federal rule about excluding certain Medicaid waiver payments from income.
• The exclusion applies to qualifying payments for care provided in your home under a state Medicaid waiver program.
• Your federal forms may reference these payments on Schedule 1 or via W-2 box 12 code II.

If you’re unsure whether your IHSS payments meet the Medicaid waiver criteria, confirm the payment type with your program administrator and keep records that show the nature of the care and where it’s provided.