Tax Exempted Waiver Payments

Last week, The Arc reported on IRS Bulletin (2014-4) and an accompanying Q&A clarification document which, as of January 3, 2014, under IRS Code §131, allow payments to qualified Medicaid waiver providers to be excluded from gross income tax for reporting purposes. The clarification document states, in part, “… 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.” The Arc sought clarification from the Internal Revenue Service and learned that individual providers can amend previous tax returns according to standard amendment practice. The IRS will release additional FAQs next month.

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