IRS Changes for IHSS and WPCS Home Providers in the 2024 Tax Season

*Our team at Galt Advocacy are not tax professionals – The contents of this blog are to be informative, educate you on recent changes, empower you to make the best decision for you and your family, and we highly encourage you to consult a tax professional in order to navigate your unique situation and challenges.

The 2024 tax season brings significant changes for In-Home Supportive Services (IHSS) and Waiver Personal Care Services (WPCS) home providers in California. These changes, implemented by the IRS, require all IHSS and WPCS providers to fill out a tax form, regardless of the SOC2298 filing. Understanding these updates is crucial for IHSS and WPCS home providers to ensure compliance and optimize their tax situations.

What are IHSS and WPCS?
Before delving into the IRS changes, it’s important to understand the roles of IHSS and WPCS.

• IHSS (In-Home Supportive Services): A California MediCal program designed to help elderly, blind, and disabled individuals remain safely in their homes by providing personal care services.

• WPCS (Waiver Personal Care Services): Similar to IHSS, WPCS is a MediCal program and provides additional support under specific waiver programs for those who qualify for more intensive care than IHSS can give them.

Both programs play a vital role in supporting individuals who need assistance with daily living activities, allowing them to live safely at home and maintain their independence.

IRS Changes for 2024

  1. Clarification on Tax Exemptions For the 2024 tax season, the IRS has clarified that income received by IHSS and WPCS providers is still exempt from federal income tax when form SOC2298 is on file and services are provided to a qualifying individual in the provider’s own home. This exemption aligns with the IRS Notice 2014-7.
  2. Filing Requirements Providers who reside in the home with their care recipient have previously not been required to file federal and state taxes on the IHSS and WPCS income after filing form SOC 2298 “Live in Self-Certification Form.”
    The Internal Revenue Service (IRS) has changed this regulation and, as of the 2024 tax season, will be sending W-2 forms to all IHSS and WPCS recipients regardless of whether or not they have filed the SOC 2298.
    Those who filed SOC 2298 still retain this income as non-taxable. But they will need to report it to the IRS by filing a tax form.
  3. California Franchise Tax Board Update As per the California Franchise Tax Board, IHSS/WPCS income may now be excluded from taxation and still be counted as earned income for the purpose of determining the California Earned Income Tax Credit (EITC).

Providers should consult with a tax professional to understand their specific requirements.

Tips for IHSS and WPCS Providers

To navigate these changes effectively, consider the following tips:

· Consult a Tax Professional: Given the complexity of tax regulations, consulting with a tax professional can provide personalized advice and ensure compliance with both federal and state requirements.

· Stay Informed: Tax laws and regulations can change. Staying informed about any updates or changes can help providers avoid potential pitfalls.

· Organize Financial Records: Keeping meticulous records of income and expenses related to IHSS and WPCS services can simplify the tax filing process.

Frequently Asked Questions (FAQs)

  1. What do the 2024 IRS changes mean for IHSS and WPCS providers?

The IRS now requires all IHSS and WPCS providers to report their income, even if they filed the SOC 2298 form. While this income remains non-taxable, providers must include it on their tax forms starting in the 2024 tax season. We recommend consulting a tax professional to ensure proper reporting.

      2. Do I need to report IHSS income if I filed the SOC 2298?

Yes. Even though your income remains exempt under IRS Notice 2014-7, it must now be reported on your W-2 and filed with your taxes. For clarity on how this applies to your situation, please consult a tax professional.

       3. What is Box 12-II on my W-2 form?

Box 12-II indicates your IHSS Live-In Provider exempt wages that are excluded from taxable income (Boxes 1 and 16). This change aligns with IRS regulations starting in 2024.

       4. Why does my W-2 show income in Box 3 (FICA) and Box 5 (Medicare) even after filing SOC 2298?

The SOC 2298 exemption applies only to federal and state wages, not to FICA or Medicare. These amounts will still appear in Boxes 3 and 5 on your W-2. For personalized advice on how this impacts you, consult a tax professional.

        5. Can Galt Advocacy help me navigate these tax changes?

 Galt Advocacy can provide only general information to help IHSS and WPCS providers understand these changes. For tax     specific advice, we encourage consulting a qualified tax professional.

        6.  Where can I learn more about IRS rules for IHSS and WPCS providers?

   You can visit the California Department of Social Services IHSS resources page or the State of California Franchise Tax Board.

How 2024 IRS Changes Impact IHSS & WPCS Providers

The IRS changes for the 2024 tax season for IHSS and WPCS home providers do not change the non-taxed income status. It simply needs to be reported to the IRS, and it may even enable families to take advantage of the California Earned Income Tax Credit.

Need Help Navigating IRS Changes?

At Galt Advocacy, we understand the challenges IHSS and WPCS providers face with changing tax regulations. While we provide general guidance and resources to help you navigate these updates, we recommend working with a qualified tax professional to ensure compliance and make informed decisions tailored to your needs.

If you have questions or need additional support, contact us today to learn what services we can assist you with.