April 28

Host Home/Companion Care “Difficulty of Care” Income Tax Exemption

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*Updated Mar 2nd2024 with more current information

Understanding the Difficulty of Care Exemption for Host Home Companion Care Providers in Texas

*Note: The following is a generalized overview, and should not be construed as legal or tax advice. Please consult with a qualified professional in your area before making any decisions regarding taxes and/or IRS regulations.

If you’re a Host Home/Companion Care provider in Texas who lives with the person you care for, you may be wondering if you qualify for the Difficulty of Care exemption. This exemption allows caregivers to exclude income from caring for a person living in the same home from being included as gross income. While this exemption can be difficult to apply for, the benefits can be significant. Here’s what you need to know about the Difficulty of Care exemption.

Key Takeaways

  • According to the IRS, the “provider of care” can be either related or not related to the “recipient of care.” If they live in the same household, then their income is NOT considered part of the gross income.
  • This rule applies whether the provider is a parent or a non-related individual.
  • It is important to note that this is not OPTIONAL – if you meet these criteria, you are required by law to exempt this income from your gross income.
  • This can have a significant impact on your taxes, so it is important to be aware of this rule if you are providing care for someone in your home.

What is the Difficulty of Care Exemption?

Host Home/Companion Care “Difficulty of Care” Income Tax Exemption 1 March 2024

The Difficulty of Care exemption is a program that allows caregivers to exclude income from caring for a person living in the same home from being included as gross income. This exemption can be difficult to apply for, as it requires significant documentation on the caregiver’s behalf. However, the benefits of this exemption can be significant, as it can allow caregivers to keep more of their own income.

In order to qualify for the Difficulty of Care exemption, caregivers must provide documentation demonstrating that they provide care that is above and beyond what is typically required. This documentation must be provided on an ongoing basis in order to maintain the exemption. In addition, caregivers must also provide proof that they are living with the person they are caring for.

What are the benefits of the Difficulty of Care exemption?

Host Home/Companion Care “Difficulty of Care” Income Tax Exemption 3 March 2024

The main benefit of the Difficulty of Care exemption is that it allows caregivers to keep more of their own income. This can be a significant financial relief for caregivers who are struggling to make ends meet. In addition, this exemption can also help to lighten the load for caregivers who are providing care above and beyond what is typically required.

Claiming the Difficulty of Care Exemption

Host Home/Companion Care “Difficulty of Care” Income Tax Exemption 5 March 2024

To qualify for this exemption, you must be the paid caretaker for a Medicaid waiver recipient living in your home. Sign the Statement of Eligibility for Difficulty of Care Exemption and turn it into the Financial Management Service agency completing payroll for the recipient. If they are unfamiliar with this exemption, provide them with a link to the IRS Notice 2014-7 and the IRS Question + Answers to clarify how to implement this.

Final thoughts

Host Home/Companion Care “Difficulty of Care” Income Tax Exemption 7 March 2024

The Difficulty of Care exemption can be a helpful tool for caregivers in Texas who are struggling to make ends meet. If you think you might qualify for this exemption, be sure to gather all of the necessary documentation and proof before applying. The benefits of this exemptions can be significant, so it’s worth taking the time to go through the application process. Remember, the IRS includes interest when they pay the refund. To ensure you are receiving all the benefits you are entitled to as a caregiver for a Medicaid waiver recipient, follow these steps.

About Above and Beyond Caring

Above and Beyond Caring has served the residents of Brazoria and Galveston Counties as a Texas HCS provider since 2007. We are proud to provide dedicated, compassionate care for all of the individuals we serve. Our team is committed to providing quality home and community-based services that meet the needs of our clients and their families. With our caring and highly trained staff, we strive to make sure each individual receives the best care possible. Whether you are looking for residential group homes, day habilitation, host home/companion care, or respite services, we are here to help. Contact us today to learn more about how Above and Beyond Caring can serve you.


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host home, texas hcs


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