What is difficulty of care payments

By Donna Wolfson By Kirk Mitchell More Potential Changes to the U. Retirement System Are on the Horizon. Register to receive our weekly newsletter with our most recent columns and insights. Have a question? Ask us! But those employers may still want to consider adding a difficulty of care payments provision when they next amend their plans e.

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IRS Notice Nov. The exclusion does not apply to payments made for respite care [2] , skills acquisition training, travel time, required trainings, or paid time off. All previous years, including your W2, will be reported at the full amount of wages paid for the year. As an individual tax payer, you can claim this income exclusion on your personal tax return when you file.

If you need assistance on how to do that, please contact a tax professional or the IRS. It is your responsibility to determine if this income exclusion applies to you. You are also responsible for identifying which payments are for personal care services or relief care and then excluding only those amounts from your gross wages on your tax returns.

The Description section of your end of year Earnings Statement - the last payday issued in the calendar year in , this will be the December 16, payday — lists the amount paid for specific services, including personal care services and relief care. If you need assistance or have questions about your eligibility or how to file your year-end tax return, please contact a tax professional or the IRS. The exclusion applies to all open tax years where criteria for this exclusion are met.

Please contact your tax advisor or the IRS with questions about which tax years are open and how to claim this exclusion or amend a prior return.