Client has a W2 from an agency. She qualifies to exclude income under Notice 2014-7. Agency did not withhold any SS or Medicare tax. They should have withheld, but since it is an out of state agency I doubt my client could get it corrected' Ultimately my client will be responsible for 1/2 of taxes. I am thinking on the W2 worksheet to mark the box to pay unemployment taxes on W2 income only, and file that way. Any thoughts ?
@Terry53029 wrote:
Agency did not withhold any SS or Medicare tax. They should have withheld,
Are you SURE about that? Social Security and Medicare taxes are NOT always required.
Although the "agency" may have issued her a W-2, in some cases the employer is considered the person receiving the services. If that is the case, the person is a Household Employee, and in some cases a Household Employee is NOT subject to Social Security and Medicare taxes (such as if it is your spouse).
Q12: https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income
https://www.irs.gov/publications/p926#en_US_2020_publink100086740
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