Yes. 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. You can choose to use this income to calculate Earned Income Credit. Regardless, the income will remain non-taxable. Sign into 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 from the menu on the left-hand side and then click on Wages & Income at the top; Click Edit/Add next to Job (W-2); click on Add a W-2; and enter the information as reported on your W-2. After you have entered all your W-2s, you will see a screen that looks like this: You will then get to choose if you want to include the income for Earned Income Credit or not. For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.

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Rider2

Solved

Can't file online because IHSS W2 box 1 is 0, as a live-in provider. Any way to avoid the mail-in filing and be done with it online?

Forum|Forum|3 years ago
March 28, 2023
1 reply
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TurboTax Premier Online

Best answer by ThomasM125

Any ideas on amending a 2021 return? The button for selecting medicaid waiver payments after you enter your W-2 information doesn't exist when I go in to try and amend my 2021 taxes. Amended my 2022's and had no trouble but i'm getting frustrated trying to figure out how to do the same with 2021. No one ever told us that these payments were "medicaid waiver payments" and that because i'm a live-in care giver that they were tax exempt! Been on the phone with Turbotax customer service/help for 20 minutes so far, mostly on hold so i'm not thinking they are going to be helpful, unfortunately.

On your 2021 return, you can enter the waiver as a negative "Other Income" amount and it will be subtracted from your wages reported on your W-2 form:

1. From the Personal Income screen in TurboTax, choose Less Common Income

2. Choose Miscellaneous Income, 1099-A, 1099-C

3. Choose Other reportable income

4. On the screen that says Other Taxable Income enter a description (Medicare waiver) and the amount as a negative number

CatinaT1

Yes.

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. You can choose to use this income to calculate Earned Income Credit. Regardless, the income will remain non-taxable.

Sign into 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 from the menu on the left-hand side and then click on Wages & Income at the top;
Click Edit/Add next to Job (W-2); 
click on Add a W-2; and enter the information as reported on your W-2.
After you have entered all your W-2s, you will see a screen that looks like this:

You will then get to choose if you want to include the income for Earned Income Credit or not.

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

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Rider2Author

Got it. What should I put on the next screen? The amount in Box 3 or 5? or just 0?

When I put the amount in the box 3 in the box below it increases my return but I have a feeling that since box 1 is 0 I shouldn't put any amount in the box below.

Rider2Author

I checked the "nontaxable Medicaid waiver..." option for our W2's with 0 in box 1, and put nothing in the box asking "Enter the total amount of difficulty of care payments you received from ...",

but still get this error