IHSS payments are earned income for EITC - Spidell

IHSS payments are earned income for EITC

In a pending precedential decision, the OTA followed the Tax Court’s ruling in Feigh v. Comm. (2019) 152 TC 267, and held that a taxpayer’s In-Home Supportive Service payments received for taking care of her adult disabled daughter in her home were “earned income” for purposes of California’s Earned Income Tax Credit pursuant to R&TC §17052. (Appeal of Akhtar, 2021-OTA-118P) The OTA also held the fact that the payor did not withhold California income tax from the payments was not relevant because the wages paid were subject to withholding even though no taxes were actually withheld. Consequently, the taxpayers were entitled to a $1,279 Earned Income Tax Credit based on the $6,308 in IHSS payments the taxpayer-wife received.