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1099 Box 6 Medical Payments

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    1099 Box 6 Medical Payments

    I have a client that stays home and takes care of her husband. The state pays her to do this and thus she has a schedule c. I was wondering what if any expenses she can take to offset the schedule c?

    #2
    I'm temporarily avoiding your question, but have a couple of thoughts on the matter:

    (1) I wouldn't automatically assume it goes on Schedule C. It seems questionable to me that taking care of your spouse is a "business" with a "motive for profit".

    (2) Are these payments part of the "Medicaid Waiver" plan that would exempt the payments from income tax? The taxpayer should check into that.

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      #3
      The income is taxable, but not subject to self-employment tax. I've had several clients in situations like this -- a family member who stays home to care for a disabled spouse/child/relative -- and is paid by the state. I can give you a cite when I get to the office next week. The income should go on Line 21, or whatever Line 21 is this year. If you want to make sure that she is not contacted by the IRS, then put it all on Schedule C, back it all out, and then put on whatever-line-is-21-this-year.

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        #4
        Poster: s10cberry

        Does any of the following apply to your scenario?

        If payments part of the "Medicaid Waiver" plan see:

        TTB 3-18
        Medicaid waiver payments. Medicaid waiver payments are payments made by a state or local government or an entity certified as a Medicaid provider to an individual care provider for nonmedical services provided to an eligible individual living in the care provider’s home. Qualified Medicaid waiver payments are treated as difficulty of care payments and are excluded from gross income. (Notice 2014-7)


        also See IRS link for:

        Family Caregivers and Self-Employment Tax

        https://www.irs.gov/businesses/small...employment-tax

        Special rules apply to workers who perform in-home services for elderly or disabled individuals (caregivers). Caregivers are typically employees of the individuals for whom they provide services because they work in the homes of the elderly or disabled individuals and these individuals have the right to tell the caregivers what needs to be done. See the Family Caregivers and Self-Employment Tax page and Publication 926 for more details.
        Last edited by TAXNJ; 07-17-2020, 09:27 AM.
        Always cite your source for support to defend your opinion

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