Question: In the state of California, we can earn income through in-home healthcare support. The income is reported on a W-2, but I read somewhere that it is not to be used to calculate earned income credit, or EIC. If I have other income, should I still report the earnings from the W-2 or not include it?
Answer: You are referring to something called In Home Supportive Services or IHSS, says Lawrence Pon, a CPA/PFS with Pon & Associates.
In 2014, the IRS issued a notice that says this income is no longer taxable if you are providing services for someone you are living with. This generally would mean a parent or child, Pon said.
"Since this income is exempt from federal tax it is not considered to be earned income for EITC purposes," said Pon.
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