Behind on Your Adult Foster Home Taxes? Here’s How to Get Back in Compliance — One Step at a Time

If you own or operate an Adult Foster Home (AFH) or Adult Foster Care business in Washington or Oregon, you’re not alone if you’ve fallen behind on your tax filings. Between resident care, staff management, and state inspections — taxes often take a backseat.

But here’s the truth: getting caught up is easier than you think — especially when you take it one step at a time with a professional who understands your industry.

As a Vancouver, WA and Portland, OR AFH tax expert, I help providers just like you navigate Medicaid waiver income, business deductions, and back tax compliance every single week.

✅ Step 1: Gather Your Financial Records

Start by collecting everything related to your business income and expenses. Don’t worry if it’s messy or incomplete — that’s normal when you’re behind.

Here’s what you’ll need:

• Bank statements (personal and business)

• Medicaid payment reports

• Resident care logs or invoices

• Payroll and caregiver wage summaries

• Receipts for food, supplies, and home maintenance

• Mortgage interest or rent payments

• Utility and insurance records

💡 Tip: If you received Medicaid waiver payments under IRS Notice 2014-7, those may be excludable from income — but they must still be properly documented. Most general tax preparers miss this critical step.

✅ Step 2: Review Past Tax Years

Before filing anything new, identify which years are missing or incomplete.We’ll start by requesting your IRS and state wage/income transcripts to confirm what’s been reported under your EIN or SSN.

Once we know what’s missing, we can prioritize filings — usually starting with the oldest unfiled year first to prevent escalating penalties.

✅ Step 3: Rebuild Your Books

If bookkeeping wasn’t kept up, we’ll recreate your Profit & Loss for each year.This step ensures your income, expenses, and deductions are accurate — and that we can clearly separate Medicaid waiver (tax-free) from private pay (taxable) income.

🔍 This is where having an Adult Foster Home accountant who understands your setup pays off — because not all income is treated the same under Washington or Oregon tax law.

✅ Step 4: File and Get Current

Once your financials are reconstructed, we’ll prepare and e-file your missing returns.If you owe back taxes, we’ll work with the IRS or state to:

• Set up a payment plan, or

• Request penalty abatement if you qualify due to reasonable cause (such as illness, caregiver burnout, or financial hardship).

💬 Many of my AFH clients are surprised by how quickly they can become compliant — often within just a few weeks.

✅ Step 5: Put Systems in Place Going Forward

After you’re caught up, we’ll make sure this never happens again.

Together we’ll:

• Set up monthly bookkeeping

• Separate Medicaid waiver from taxable income

• Establish a year-end tax plan

• Track business vs. personal expenses correctly

• Stay compliant with both Washington DOR and Oregon Department of Revenue

With clear systems and a proactive accountant, you’ll have confidence knowing your AFH is financially sound and audit-ready.

💼 Work with an AFH Tax Expert Who Understands You

If you’re in Vancouver, WA, Clark County, or the Portland, OR area and you’re behind on tax filing — don’t panic. You don’t need to figure it out alone.

As a Certified Management Accountant (CMA) and IRS Enrolled Agent, I specialize in:

• Adult Foster Home (AFH) and Adult Care Business taxes

• Medicaid waiver income reporting (IRS Notice 2014-7)

• Bookkeeping cleanup and back-filing

• Ongoing CFO-level guidance for small care home owners

📞 Let’s get your AFH back on track — one step at a time.

👉 Schedule a confidential consultation by emailing: christina@acuitytaxgroup.com

📍 Serving Vancouver, WA · Portland, OR · and surrounding areas