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On January 3, 2014, the Internal Revenue Service (IRS) made a public announcement regarding Difficulty of Care Payments for families.

Posted: March 3, 2014

On January 3, 2014, the Internal Revenue Service (IRS) made a public announcement regarding Difficulty of Care Payments for families. In 2011, the Association of Area Agencies, Community Support Network, Inc. (CSNI) requested a private letter ruling regarding payment to parents for the support of their adult children. The ruling, Notice 2014-7 Qualified Foster Care Payments under the Waiver became official on Friday, January 3, 2014.  Much of what was found in the final notice was based on the request of CSNI.

In summary, the notice states that families who are paid to care for their adult children, in their home, will be treated the same as Enhanced Family Care Providers are far as taxable income, meaning family members or non-family members who are paid, as part of a care plan, for the provision of waivered services for those age 18 and over are eligible for the Section 131 exclusion as “difficulty-of-care payments.   This tax treatment applies to tax years going forward and 2013.  As a result Area Agencies do not have to issue a 1099 for payments made in 2013.

As CSNI cannot give Tax Advice, if you have questions regarding this, it is recommended that you seek consultation from a Tax Advisor.

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