03/24/2026
An Important Update About 1099s and Program Payments!
In case you missed the update provided on the Bridge call or in the March Newsletter, we wanted to let you know about some important tax information from Interim Director Alan Abramowitz...
Over the past month, families raised questions about why the Program has historically issued IRS Form 1099 for certain payments. We reviewed the federal tax law, consulted outside tax counsel, and examined how similar programs handle this issue. Based on that review, we are making a change.
Going forward, the Program will not issue 1099 forms to parents or family members who are caring for their own disabled child in the home. Under federal law, specifically Internal Revenue Code §131 and IRS Notice 2014-7, payments made to a parent providing care in the home are generally treated as “difficulty of care” payments and are excluded from federal income tax. In simple terms, these payments are not treated as taxable income from the Program’s reporting perspective unless someone is operating a caregiving business in the ordinary course of that business.
We will also not issue 1099 forms for the monthly support payment currently referred to as the “wage benefit.” That name is misleading, and we will be renaming it. It is not a wage and not payment for employment; it is a statutory support benefit tied to eligibility under the Birth Injury Act. Because it is a program support benefit and not compensation for services, it will not be reported on a 1099.
If you receive a 1099 this year, please contact the Program and we will correct it. For tax years 2023 and 2024, we will be issuing corrected 1099 forms and filing those corrections with the IRS. You will receive a corrected form along with a letter explaining the change. If you previously reported those amounts as income, you should provide the corrected form to your tax preparer and ask whether you should amend your return.
This reporting practice dates back many years. When it was brought to our attention, we reviewed the law, sought outside counsel, and took corrective action. As always, each family’s tax situation is unique, and you should consult with your tax professional regarding your specific circumstances. Our goal is straightforward: to be legally accurate and transparent to families. Every family’s tax situation is different. The program cannot give individual tax advice. It is each caregiver’s responsibility to determine whether the federal exclusion applies to their specific situation. If you have additional questions, you can email [email protected].