Solved

2014-7 Difficulty of care act

Forum|Forum|6 years ago
February 4, 2020
5 replies
0 views

Followed the instructions on entering the w-2's for the 2014-7 act. Does this also adjust this for me in the state part or do I have to exclude that income from taxes there also or does turbotax do that for me?

Best answer by CatinaT1

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. This Notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, are difficulty of care payments and excludable as income.

If these payments are paid to you in box 1 of form W-2 (they should not), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, follow these steps: Do not enter the W-2 in the Wages & Salaries topic. Instead enter it as Other Reportable Income under the Miscellaneous Income section. Take the following steps:

Sign in to TurboTax Online, click Continue your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);

Click on Federal Taxes at the top of the screen;
At the bottom of Your Income box pick the option in blue to help me add other income, then jump to full list;
Scroll down the page to the last section titled: Less common Income and click show more;
Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
Scroll down to the last option titled Other reportable income and select start or edit;
When it asks, "Any other reportable income?" say yes then you will make two entries:
Your first entry description would be W-2 EIN # (enter EIN number from W-2) Box 1 Medicaid Waiver Payments, and enter the Box 1 amount as a positive number.
Next you click "Add Another Miscellaneous Income Item," and enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number.

This both shows and explains removing the W-2 income, placing a zero on Line 21 of your Form 1040.

If your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Other Income Taxes as Withholding not already entered on W-2.

For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.

DawnC

Employee

Only some states exempt that type of income. Which state are you filing? And how did you exclude the income from your federal return?

Qualified Medicaid waiver payments

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

H

hjones1

I also need that answer. I am currently on phone with a client and we are trying to find where to enter that information.

CatinaT1Answer

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. This Notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, are difficulty of care payments and excludable as income.

If these payments are paid to you in box 1 of form W-2 (they should not), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, follow these steps: Do not enter the W-2 in the Wages & Salaries topic. Instead enter it as Other Reportable Income under the Miscellaneous Income section. Take the following steps:

Sign in to TurboTax Online, click Continue your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);

Click on Federal Taxes at the top of the screen;
At the bottom of Your Income box pick the option in blue to help me add other income, then jump to full list;
Scroll down the page to the last section titled: Less common Income and click show more;
Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
Scroll down to the last option titled Other reportable income and select start or edit;
When it asks, "Any other reportable income?" say yes then you will make two entries:
Your first entry description would be W-2 EIN # (enter EIN number from W-2) Box 1 Medicaid Waiver Payments, and enter the Box 1 amount as a positive number.
Next you click "Add Another Miscellaneous Income Item," and enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number.

This both shows and explains removing the W-2 income, placing a zero on Line 21 of your Form 1040.

If your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Other Income Taxes as Withholding not already entered on W-2.

For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

M

ME1980

How do I enter income for North Carolina taxes, if the income(2014-7) is not exempt from state income taxes?

L

Ldotson88

With the ruling that was in favor of those who qualify for difficulty of care payments being able to have a zero agi and no fed tax but also being able to claim income for purposes if the earned income credit where are instructions how to go abour this and how to amend previpus years taxes for this. I need to know, I had a w2 for 2020 because i did not know i qualified so taxes were taken out. My tax person i used this year is clueless how to go about this....and did my taxes completely wrong 😠 2014-7 seems to be the old code which was im assuming changed because there was a court ruling on this issue I think it was 2019? But hard to find any I formation in regards to clarifying exactly how filing works, i found one example but lost the link. Havent found it since.

C

Cynthiad66

That IRS Notice is still in effect. It is true that the Tax Cuts and Jobs Act made a number of changes, but this provision was not changed. If the payments in question are for someone you are caring for in your home, then they are excluded from income (not the case if the individual does not live in your home).

The following FAQ goes into more detail on the subject: https://ttlc.intuit.com/replies/4360071

Per @DanielV01

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

A

amberpatnaude

I received a 1099-NEC, how am I supposed to enter it on turbo as the exclusion for 2014-7? When filling out 1099-NEC, turbotax does not provide a spot to enter exclusions besides "expenses".

J

JamesG1

IRS Notice 2014-7 payments are not taxable and not reportable. But since you have received a 1099, you want to acknowledge to the IRS that you are in receipt of the form. You want to record the 1099 income, then immediately reverse the entry in the tax return. Follow these steps.

Select Federal from the left side menu.
Click on Wages & Income.
Scroll down to Less Common Income. Click Show more.
Click Start / Revisit to the right of Miscellaneous income….
Click Start / Revisit to the right of Other reportable income.
At the screen Other Taxable Income enter ‘IRS Notice 2014-7 payments’.
At the screen Other Miscellaneous Income Summary, click Add another miscellaneous item.
Enter the same description but enter the payment amount as a negative number.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

The entries will be reported on the worksheets within your tax return.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

A

amberpatnaude

@JamesG1 Just to confirm, I would add the income in the miscellaneous and then re input it in the same spot with the same numbers, but negative. Correct? Thank you so much!