Update on IRS Caregiver Live-in Exemption (IRS Notice 2014-7) under CFC

What is the IRS Caregiver Live-in Exemption?
IRS Notice 2014-7 states that certain caregiver income (so-called Difficulty of Care Payments) that is received for caring for a client that is receiving services under a Medicaid HCBS waiver is not subject to Federal and State income taxes, if the client and caregiver reside in the same residence.

Does Alpine allow Caregiver to take advantage of IRS 2014-7?
Yes, Alpine has allowed its caregivers for over a decade now to claim the Difficulty of Care / IRS Live-in Caregiver exemption and, if they so chose, has not withheld Federal or State income tax from their paychecks. 

Will the IRS Caregiver Live-in Exemption still be valid under CFC?
HCPF has requested confirmation from the IRS regarding the applicability of IRS 2014-7 under Community First Choice (CFC), as technically CFC is not a waiver service, but a State Medicaid plan. The expectation is that it will be possible to claim this exemption under CFC as well. In the absence of a negative response from the IRS, Alpine will continue to allow its caregivers to take advantage of this exemption and will continue to not withhold any State or Federal income taxes from Alpine caregivers who would normally qualify for the exemption if their client was receiving services under an HCBS waiver (and lived with them). 

Please do not hesitate to contact Alpine at 303 309 6202 if you have any more questions about Difficulty of Care Payments under CFC or would like to claim the IRS Caregiver Live-in Exemption.