Webmar 24, 2022 · you don't pay income tax on ihss payments, but you may use the income to get a earned income credit if the other requirements ate met. If you live with your client, ihss income is not taxed. If you do not live with your client, it is not exempt and you will be charged taxes. Webthankfully, ihss benefits themselves are not considered taxable income for recipients. However, it's essential to be aware of potential tax obligations if you hire a caregiver to. Webmay 14, 2021 · under a recent office of tax appeals decision, income received as a caregiver from a medicaid waiver or ihss program for providing care to someone you. Visit irs’ certain medicaid waiver payments may be excludable from income for more.