IHSS parent providers do not have to pay income tax on their IHSS payments, so what do you do if you received a W2 from IHSS this year? We asked Public Benefits Specialist Lisa Concoff Kronbeck and a California CPA for clarification.
IHSS will now send W2s to parents who have “self-certified” as being exempt from income tax.
On your W2, your IHSS income will be reported in Box 12II to document that you received this income. Per the IRS General Instructions for Forms W-2 and W-3, Box 12II is coded as “Medicaid waiver payments excluded from gross income under Notice 2014-7.”
Note that Box 12 is for information only, and you still do not need to pay income tax on IHSS income. Situations where income reported in Box 12 may be countable include qualifying for a mortgage, preparing a FAFSA form for secondary education, qualifying for tax credits such as earned income or child tax credit, or eligibility for contributions to a ROTH IRA account. Your IHSS income is not used when calculating income tax or Social Security taxes (FICA).
If you have further questions about how your IHSS income affects your tax reporting, please speak with your tax professional.
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