Discussion:Deds Against Payments Received for Disabled Child

From TaxAlmanac, A Free Online Resource
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Advanced Tax Questions --> Deds Against Payments Received for Disabled Child
Discussion Forum Index --> Tax Questions --> Deds Against Payments Received for Disabled Child

Tipper (talk|edits) said:

May 30, 2008

Hello. I have a 1099 Misc, box 6 amount. My client receives income from the State, as a sub-contractor (according to the contract) for providing care for her disbled adult daughter. The amount is about 36000. Since the income needs to show on a Schedule C, what expenses can be deducted? Daughter's clothing, food, housing, personal care, entertainment, auto mileage????????

There is an old case out there with this same scenerio, except the mother did not claim it as income. The case revolves around that issue, and not whether anything can be deducted. That issue says the income is taxable, but not SE taxable, since the IRS believed the mother was not in the business of adult care.

My client works part time and earns around 16000 from this job. The rest of her time is spent caring for the daughter, who is unable to be left alone for long periods of time.

Soooo, do I show the 1099 on Line 21 of the 1040, and deduct nothing, or show it on the Sch C and show expenses? or report it on the Sch C, with a deduction in the same amount, with reference to it being reported on line 21 with no SE?????

HELP. Thanks

Jdugancpa (talk|edits) said:

30 May 2008

I have a client who receives a W-2 from her daughter via DSHS. Wages paid are listed in Box 1, nothing in Box 3 or Box 5. I think there is a case that concluded the mother was somebody's employee, not an independent contractor. The state considers her the child's employee, but issues the W-2. But the wages are not subject to FICA taxes. As to deducting clothing, food, etc, my guess is the state is paying separately for living expenses which are not included in the 1099. You should inquire about that.