IHSS income, CA and Federal Tax Requirememts

Forum|Forum|1 year ago
February 15, 2025
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My wife cares for our son, in home, and receives IHSS income. The W2 received shows 40% of her income in Box1 and 60% in Box 12 (Code in 12a is II). W2 box 16 (CA wages) shows the same 40% of total income. From what I see, box 12 is added and stripped from income in schedule 1. What I do not understand is why any income is in Box 1 and 16 -- as these represent taxable income (no federal or state withholding was done, so the program shows us owing for that). Everything I read says none of this income is taxable, yet here we are paying tax on it per the W2 sent. Is there an income limit I cannot find? Anything to do with hours being overtime? Is there something to the 60/40 split?

Help.

Best answer by AmyC

1. The income in box 1 can be taxable or not.

If it is better for you to claim the income in order to receive Earned Income Credit or additional child tax credit, then you should include it. See CA IHSS
If it is not helpful, you may exclude the income, IRS Notice 2014-7.

2. No income limit or overtime.

3. The IRS did change the rules during 2024. This timing change is affecting your box 1 and 12. See Live-In Provider Self-Certification Information states: Why does my W2 show no wages in {box 1} or State Wages in {box 16}?
If you are a Live In Provider who submitted a SOC 2298 your IHSS wages are not reported as income. Due to an IRS rule change implemented in 2024, exempt wages will be included in box 12-II of your W-2.

To subtract the w2 income:

go to the federal income section
scroll to the bottom
Miscellaneous Income, 1099-A, 1099-C, Start
Scroll to the bottom
Other reportable income, Start
Other taxable income?
Select YES
Description -nontaxable IHSS wages
Amount, enter negative box 1 amount
Continue

I noticed on the IRS website, that they have a known issue with that code in box 12. You may want to wait to file your return, see Known issues and solutions.

AmyCAnswer

Employee

1. The income in box 1 can be taxable or not.

If it is better for you to claim the income in order to receive Earned Income Credit or additional child tax credit, then you should include it. See CA IHSS
If it is not helpful, you may exclude the income, IRS Notice 2014-7.

2. No income limit or overtime.

To subtract the w2 income:

go to the federal income section
scroll to the bottom
Miscellaneous Income, 1099-A, 1099-C, Start
Scroll to the bottom
Other reportable income, Start
Other taxable income?
Select YES
Description -nontaxable IHSS wages
Amount, enter negative box 1 amount
Continue

I noticed on the IRS website, that they have a known issue with that code in box 12. You may want to wait to file your return, see Known issues and solutions.

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