What I check on every return
- Every credit you qualify for checked, including the Earned Income Credit and Child Tax Credit
- Each payer sorted: agency, CDS employer, private family or self-employed
- Medicaid waiver payments checked for the difficulty of care exclusion
- Overtime checked for the new deduction
- Mileage between clients deducted when you're self-employed
Deductions caregivers often miss
- Medicaid waiver payments for caring for someone who lives in your home, which may be excludable
- Mileage between clients and to appointments (self-employed caregivers)
- CPR, first aid and certification courses
- Scrubs, gloves and supplies you pay for
- Background check and TB test fees
- The business share of your phone
Houston and Texas rules that apply to you
- Texas CDS: under Texas HHS Consumer Directed Services, the person receiving care (or their family) is your employer and a financial management services agency issues your W-2.
- Private-pay families: if a Houston family pays you directly and directs your work, you may be their household employee rather than a contractor. That changes who owes Social Security and Medicare tax.
- No Texas income tax: your return is federal only, but self-employment tax (15.3% for Social Security and Medicare) applies once your net self-employment income reaches $400.
New for 2026 returns (filed in 2027)
- Difficulty of care payments: if you live with the person you care for and are paid through a Medicaid home and community-based waiver, those payments may be excluded from income. You can still choose to count them as earned income for the Earned Income Credit and Child Tax Credit when that gives you a bigger refund.
- No tax on overtime: agency and CDS employees paid time-and-a-half can deduct the extra half, up to $12,500 ($25,000 married filing jointly), for 2025 through 2028. It phases out above $150,000 of income ($300,000 joint).
What to bring
- Every W-2, 1099-NEC or 1099-MISC
- Statements for Medicaid waiver or CDS payments
- Proof of the address you and the person you care for share, if you live together
- Records of payments from private families
- Mileage log and receipts for courses and supplies
Common questions
I live with my mother and get paid to care for her through Medicaid. Is it taxable?
Possibly not. Medicaid waiver payments for care in the home you both live in can qualify as difficulty of care payments and be left out of income. If they were taxed in past years, you may be able to amend and get a refund.
Should I include those payments to get the Earned Income Credit?
You can choose to. If including them raises your Earned Income Credit or Additional Child Tax Credit by more than the tax they add, it's worth it. I calculate both ways.
Where I work
I'm based in Houston and work with clients across Harris, Fort Bend, Montgomery and Brazoria counties, including Pasadena, Pearland, Sugar Land, Missouri City, Katy, Cypress, Spring, Humble, Baytown and The Woodlands. Meet in person in Houston or do everything online, in English, Spanish or Portuguese. I also work by video with clients in Beaumont & Port Arthur, Duncanville, DeSoto, Cedar Hill & Lancaster.
Get a flat-fee quote before I start
Book a free 15-minute call. I'll tell you what your return needs and what it costs. Fees are never a percentage of your refund.
Book a free callSee typical pricesOfficial sources: IRS: Medicaid waiver (difficulty of care) payments ↗ · IRS: tips and overtime deductions ↗ · IRS: Self-Employed Tax Center ↗
Updated October 2026 for 2026 returns filed in 2027. General information only, not tax advice for your situation. Rules and amounts can change; your situation is confirmed when your return is prepared.
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