Client Received W2 For taking care of disabled daughter

[GOgil1963]

Hello, my client took care of her disabled daughter in 2021 and received a W2 for $15,000 under her name and her daughter is the employer. Payment was made by the state of California. 

How should my client report that money? Shall she include her daughter as her dependent? Her daughter is 32 years old.

Thank you

[TaxGuyBill]

Assuming the client lives with the daughter, the client needs to contact her daughter's social worker and ask if the payments are through a "Medicaid Waiver" program, that qualifies for "IRS Notice 2014-7".  You can't do anything until you find that out.

As for a dependent, I would GUESS so, but we don't know the facts.  You need to look up the dependency rules to determine if she qualifies.

[GOgil1963]

Thank you very much for the advice.

[Terry53029]

The mother is treated as an household employee, and should not have had SS or Medicare deducted. And as bill said she may be entitled to treat wages under notice 2014-7

Don't count wages you pay to any of the following individuals as social security or Medicare wages, even if these wages are $2,400 or more during the year.

1. Your spouse.

2. Your child who is under the age of 21.

3. Your parent. with exceptions (see pub 926)