North Star Oregon

If you're a parent caring for your adult child with intellectual or developmental disabilities in your home, there's a tax provision you need to know about. IRS Notice 2014-7 allows parents employed as in-home caregivers to exclude qualifying Medicaid waiver payments from their federal income taxes—potentially saving thousands of dollars per year. At North Star Oregon, we're committed to helping our parent-employees understand and access this benefit. Here's what you need to know. What Is IRS Notice 2014-7? In 2014, the IRS extended "difficulty of care" tax treatment—originally designed for foster parents—to caregivers providing services under Medicaid Home and Community-Based Services waiver programs. This means parents who work for disability services providers like North Star can exclude certain payments from their taxable income. The key word is certain. Not all services qualify, and the rules are specific. Which Services Qualify? In-home Attendant Care services qualify when you provide care to your child in the home you share together. This includes: Assistance with bathing, dressing, toileting, and mobility Meal preparation and feeding assistance Medication reminders Light housekeeping in shared living areas Shopping and transportation for medical appointments or essential needs Other activities of daily living performed in the shared home The Critical Requirements To qualify for the tax exclusion, you must meet ALL of these conditions: You and your child live together full-time in the same home Your child receives services under Oregon's Medicaid waiver program (K Plan or 1915(c) waivers through ODDS) You provide in-home attendant care services as described in their plan of care You're paid through the Medicaid waiver program for these specific services The "same home" requirement is strict. This means: You share the same primary residence You don't maintain a separate home where you spend weekends or holidays You can document the shared living arrangement with matching addresses on IDs, utility bills, etc. What This Means for Your Taxes The Income Tax Exclusion Qualifying Medicaid waiver payments are excluded from federal gross income. This means you don't pay federal income tax on them. However, you still pay Social Security and Medicare taxes (FICA). When North Star is your employer (as opposed to a consumer-directed arrangement), FICA applies even to excludable income. This is actually beneficial—it means you're earning Social Security credits toward your retirement benefits. Your W-2 Will Look Different Your W-2 from North Star will show: Box 1 (Wages): Only your taxable wages (training, PTO, any non-qualifying services)—excludable attendant care is removed Box 12 Code II: The amount of excluded Medicaid waiver payments Boxes 3 & 5 (Social Security/Medicare wages): ALL your wages including excludable payments Boxes 4 & 6: The FICA taxes actually withheld The fact that Box 1 is smaller than Boxes 3/5 is correct and expected. The Earned Income Tax Credit Opportunity Here's where it gets interesting. A 2019 Tax Court case (Feigh v. Commissioner) ruled that you can have your cake and eat it too: the IRS now allows you to count excluded income toward earned income tax credits (EITC) and additional child tax credit (ACTC) while still excluding it from taxable income. This "double benefit" can be worth thousands of dollars for qualifying families. You'll want to work with a tax professional to claim this correctly. What You Need to Do If you think you qualify, here's your action plan: Step 1: Verify Your Eligibility Do you and your child live together full-time? Does your child receive services under Oregon's Medicaid waiver program? Are you providing in-home attendant care (not DSA)? Step 2: Contact North Star's Payroll Team We'll provide you with: An attestation form to complete under penalties of perjury Documentation requirements (matching addresses, etc.) Information about how your W-2 will be adjusted Step 3: Keep Records Maintain proof of shared residence Keep copies of your signed attestation Track which hours are attendant care vs. other services Step 4: Work With a Tax Professional This is complex tax law. We strongly recommend working with a qualified tax preparer who understands Notice 2014-7, especially if you want to claim EITC benefits. What Doesn't Qualify Be clear about what payments cannot be excluded: Any community-based services provided outside your shared home Training hours or administrative time Paid time off or vacation pay Respite care provided outside your shared home Any private payments not from Medicaid waiver programs Common Questions Q: Can I apply this to previous years? A: Yes, you can file amended returns for open tax years (generally the past 3 years). Consult a tax professional. Q: What if my child moves out temporarily? A: You must notify North Star immediately if living arrangements change. The exclusion applies only during periods of shared residence. Q: Does this affect my Social Security retirement benefits? A: No. When North Star is your employer, FICA taxes continue to apply, so you're earning Social Security credits normally. Q: What if I provide multiple types of services to my child? A: We'll track your hours separately. Only in-home attendant care hours qualify for exclusion. Any services provided outside the home or other non-qualifying services remain taxable. Q: Do I still need to report this income anywhere? A: Yes. It appears on your W-2 in Box 12 Code II, and you'll report it on your tax return with an offsetting adjustment on Schedule 1. We believe in supporting the families who provide extraordinary care to their loved ones with disabilities. Helping you access this tax benefit is part of that commitment. If you're a parent-employee providing in-home care to your child and you think you might qualify, please reach out to our payroll team. We're here to help you navigate this process and ensure you receive the tax treatment you're entitled to under the law.

At North Star Oregon, we believe that some of the most profound growth happens not within four walls, but out in the world. Our Day Support Activities (DSA) are designed to do more than just fill a day; they are crafted to enrich lives, foster independence, and build lasting connections within our community. While our DSA calendars are packed with a variety of engaging activities—from art classes and volunteering to bowling and museum visits—there is a special kind of magic that happens when we step outside. Why We Love to Be Outdoors Living in the Pacific Northwest gives us a unique advantage. We are surrounded by stunning natural beauty, from lush forests and winding rivers to calming beaches and majestic mountains. We make it a point to incorporate these incredible landscapes into our DSA programs whenever possible. For many of the individuals we support, the outdoors offers a sense of freedom and tranquility that is hard to find elsewhere. The simple act of walking on a trail, breathing in the fresh air, or listening to the sounds of nature can be incredibly grounding. The Healing Power of Nature There is something inherently healing about being in nature. It's a place where stress seems to melt away, and minds can become clearer. For individuals with intellectual and developmental disabilities, the benefits can be even more significant: Reduced Stress and Anxiety: The sensory experience of nature—the sights, sounds, and smells—can have a calming effect on the nervous system, helping to reduce anxiety and promote a sense of peace. Improved Mood: Sunlight and physical activity are natural mood boosters. Our outdoor adventures, whether it's a walk in a local park or a trip to the coast, often end with smiles and laughter. Enhanced Social Connection: Exploring a new trail or sharing a picnic in a park creates natural opportunities for social interaction and team building. It's a shared experience that strengthens bonds between participants and staff. Sensory Engagement: Nature provides a rich and gentle sensory environment that can be both stimulating and soothing, allowing individuals to engage with the world around them at their own pace. Building Confidence: Navigating a trail or trying a new outdoor activity can be a great confidence booster. It shows our participants what they are capable of and encourages them to step outside their comfort zones. Our Commitment to Community & Exploration Our DSA groups in Albany, Corvallis, Salem, Eugene and beyond are always looking for new ways to explore. We believe that everyone deserves the opportunity to experience the joy and wonder of the natural world. Whether it's a sunny day perfect for a beach trip or a misty afternoon made for a forest walk, we are committed to helping the individuals we support find their own "true north" through connection, community, and the healing power of the great outdoors. Join the Adventure!