pmt received from county for care of disabled

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  • Bill Tubbs
    Senior Member
    • Jan 2006
    • 495

    #1

    pmt received from county for care of disabled

    Client (age 20) lives in a separate residence from her folks and 13-yr-old sister; the 13-yo is disabled. The 13-yo spent a couple weeks at client's home; for which the client received about $2000 from the county for taking care of her. A W-2 arrived for that dollar amount (boxes 3-6 were $0; box 1 = $2000).

    I thought I heard that care like this was tax free income? Is income from the county for care of a disabled person ever tax free? Does it matter if the disabled person is a close relative? Or am I just hallucinating again?

    (yes, I couldn't sleep so I figured I might as well work on a few returns)

    Thanks,
    Bill
  • gkaiseril
    Senior Member
    • Feb 2007
    • 567

    #2
    All Inocme is Taxable

    I have not heard nor read anything about payments for care, services, being non-taxable if they came from the federal, state, or other agency.

    The state of Illinois, has paid some welfare parents to take care of their own children and send them a 1099-Misc. So they have some earned income, but owe income and self employment tax.

    Now paying on a W-2 with no Fica or Medicare taxes taken out is rare. The only situation I can think of that would have this situation is that the county has elected not to be covered by SSA benefits.

    Comment

    • taxea
      Senior Member
      • Nov 2005
      • 4292

      #3
      why didn't the client know this going in? If she was filed out a W-4 that should have been a clue. taxea
      Believe nothing you have not personally researched and verified.

      Comment

      • erchess
        Senior Member
        • Jan 2007
        • 3513

        #4
        My Concern

        is that the taxpayer may be required to pay SE Tax on the money in addition to income tax.

        Comment

        • Bill Tubbs
          Senior Member
          • Jan 2006
          • 495

          #5
          what the client knew...

          Originally posted by taxea
          why didn't the client know this going in? If she was filed out a W-4 that should have been a clue. taxea
          Whoa... client presented the W-2 to me presuming it was taxable income. It is I who thought I heard it might not be and figured I'd bounce the thought off this board. Doesn't look like it's tax free so I can now transmit the return (I had them sign the 8879 with it included in).

          Thanks everyone who chimed in.
          Bill

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