Medicaid waiver (2014-7)

Forum|Forum|1 year ago
February 14, 2025
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In entering all W2 information (wages box 1 and box 12a code II amounts) into the 2024 Turbotax program, I am seeing a positive dollar amount displaying in row 1d in the income section. This amount should represent the exempt amount based on notice 2014-7. The amount listed on row 1d (medicaid waiver amount) is then included in the total income and AGI amounts which are increasing the tax burden. It seems that it is inappropriate to include 1d as taxable income or it should be offset by the amount listed in schedule 1, orw 8s. In looking at schedule 1, there is a negative amount listed on row 8s which is then offset by the same amount listed as a positive amount on row 8z (net zero amount on schedule 1).

Why does the excludable income from the medicaid waiver program get included in the total and AGI amounts?

Vanessa A

It actually doesn't get included in the AGI since it is backed out. It is added and included and then backed out because it needs to be reported to the IRS since it is on the W-2 AND for those people who can also claim the Earned Income Tax Credit or Additional Child Tax Credit, the numbers need to be added in so they can be counted.

But in the end, the numbers that you entered from box 12 code II that went onto line 1d are not included in your AGI. Any numbers you entered from box 1 are included in your AGI.

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wb59Author

Your description is exactly what I thought should happen. However, that is not what I'm seeing. The amount listed on row 1d is being included in the total income (row 10) and AGI amounts (row 11). I suspect this is due to the net zero amount from schedule 1 (rows 8s and 8z are equal amounts of negative and positive values). Is this a coding glitch in the 2024 version or is there a way to manually delete the information from schedule 1 row 8z?

Vanessa A

Are you using the online or desktop version? Do you have other income? You said you had an amount in box 1, correct? If so, do you see that amount in box 1a? Is the amount in box 1 the same as the amount in box 12? Line 8 will ONLY back out line 1d and then line 11 which is your AGI will not include line 1d, but if you entered the same amount in box 1, it will appear as though it is still included.

Is part of the income on the W-2 for this not part of the IHSS payments or is the entire W-2 wages earned from Difficulty of Care?