April 01, 2015

Tax Time - Filing Information

Info/Resources on ACA Tax Credits, Excludable Income through Medicaid Waivers, Tax Highlights for Persons with Disabilities, Free Tax Preparation Assistance

ACA Penalties, Tax Credits, and Special Enrollment Periods - FAQs
The Georgetown Center on Children and Families has developed a set of Frequently Asked Questions about the Affordable Care Act’s penalties for failure to have insurance, exemptions from the requirement to have insurance, the need to pay back excess advance premium tax credits, and special enrollment periods, including the special enrollment period in effect from March 15 through April 30 for people owing a penalty for failure to have health insurance in 2014.

Excludable Income for Certain Caregivers Paid through Medicaid Waivers
On January 3, 2014, the IRS issued Notice 2014-7 addressing the income tax treatment of certain payments to an individual care provider under a state Home and Community-Based Services Waiver (Medicaid waiver) program.  The notice provides that the IRS will treat "qualified Medicaid waiver payments" as difficulty of care payments  excludable from gross income under § 131 of the Internal  Revenue Code.  For purposes of the notice, qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider's home.  A person who has already submitted a 2014 income tax return can still apply for the tax exclusion by filing an amended return form.  They may also be eligible to claim the exclusion for prior years.


Two sets of Questions and Answers about this income exclusion are available here


The IRS notice applies for income tax purposes only.  The notice does not address when qualified Medicaid waiver payments are subject to Federal Insurance Contributions Act (FICA) tax (i.e., Social Security and Medicare taxes).  (For information on those topics, see this IRS webpage and scroll down to "Parent employed by child.")


Tax Highlights for Persons with Disabilities
Another IRS website that has disability-related information is entitled "Tax Highlights for Persons with Disabilities," found at:  http://www.irs.gov/pub/irs-pdf/p907.pdf.


Free Tax Preparation Assistance
If someone cannot afford to pay for tax preparation assistance, he or she may qualify for free tax return preparation.  To see if one qualifies, go to http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers