How to enter IHSS live-in provider W2 with Zero in Box 1?

Forum|Forum|1 year ago
February 2, 2025
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Hi there, I have been a IHSS live-inprovider since the past few years. Hence wages box 1 and box 2 are zero, though boxes 3, 4, 5 and 6 have values. Turbotax would not let me e-file if box 1 is zero, hence I have been excluding IHSS W2 in my previous returns. I received the following email this year. Please advise if I should continue excluding IHSS W2 or include it and Turbotax would allow me to e-file even if box 1 is zero, or how to go about . Thank you

January 13, 2025

You are receiving this notice because you are a IHSS and/or WPCS provider, who has an In-Home Supportive Services (IHSS) Program And Waiver Personal Care Services (WPCS) Program Live-In Self-Certification Form For Federal And State Tax Wage Exclusion (SOC 2298) on file. Due to a change in the Internal Revenue Service (IRS) regulations, providers who have submitted an SOC 2298, will begin receiving W-2 forms each year starting with the 2024 Tax Year. In accordance with revised IRS regulations, federal, state, and local non-taxable income will appear on your W-2 form in Box 12-II.

Best answer by DaveF1006

Thanks DianeW777 for confirming that my entries are correct AmyC .

Requesting and just waiting for one last confirmation:

I had 2 different employers with one of them being IHSS.

So, please confirm my understanding if you meant that it is ok to take credit for my IHSS Box 4 (social security tax withheld), box 6 (Medicare tax withheld) and CA-SDI (Box 14) though the IHSS Income is not taxable. Thanks again.

Even though the income is non-taxable, you can still take credit for amounts withheld in Box 4 (Social Security tax), Box 6 (Medicare tax), and Box 14 (CA-SDI). These withholdings are separate from the income's taxability.

@jackkgan

CatinaT1

Yes, you can enter this and still e-file.

TurboTax can exempt income under Notice 2014-7 per the IRS instructions for Medicaid Waiver payments from IHHS. 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. Additionally, you can choose to use this income to calculate Earned Income Credit. Regardless, the income will remain non-taxable.

If you received a W-2 with $0 in Box 1:

Sign in to TurboTax Online, click Continue to 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, and then click on Wages & Income;
Under Wages and Income, click Start; 
Click on Work on my W-2, and enter the information as reported on your W-2.
After entering all your W-2s, you will see the screen, Let’s check for uncommon situations. Next to Nontaxable Medicaid waiver payments, check the box.
You will enter the amount of Medicaid Waiver Payments into the box asking for the total amount of difficulty of care payment you received from IHHS. This will be the same amount reported in Boxes 3 and 5 of your W-2.
When you get to the Earned Income Credit section under the Deductions and Credits portion of your return, you will be asked if you want to add your Medicaid waiver payment to your income for this credit. You can try it both ways, including it and excluding it from the calculation for the credit and see which way benefits you most.

If you received a 1099 or no form:

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, and then click on Wages & Income;
Scroll down to Less Common Income; 
Click on Start next to Miscellaneous Income, 1099-A, 1099-C.
Click on Start next to, Other income not already reported on a Form W-2 or Form 1099;
Answer Yes to Did you receive any other wages?;
Leave blank the box for Wages earned as a household employee and click continue;
Leave blank the box for Sick or disability pay and click continue;
Enter the amount of Medicaid waiver payments on Certain nontaxable Medicaid waiver payments not reported on Form W-2, and click Continue.
When you get to the Earned Income Credit section under the Deductions and Credits portion of your return, you will be asked if you want to add your Medicaid waiver payment to your income for this credit. You can try it both ways, including it and excluding it from the calculation for the credit and see which way benefits you most.

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

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jackkganAuthor

Thank you so much! I imported my IHSS W2 in Turbo Tax Premier on my mac. Request your advice for below:

1) All the values got imported except box 12a II which has 38k in my W2. Please advise what to do.. Should I manually choose drop down 12 A in Turbo Tax which says Uncollected Social Security and that 38K manually, should I choose 12A II which says "Medicaid waiver payments excluded from gross income under notice 2014-7?

2) Box 15 seems to be empty in Turbox after importing the W2 , but it shows CA in my W2. So I added that manually.

3) I don't see "Nontaxable Medicaid waiver payments" under "Let’s check for uncommon situations." . I only see following options.

CatinaT1

Yes, you can manually enter it. You would enter it just like it is on your W2, which I assume is the "Medicaid waiver payments excluded from gross income under notice 2014-7".

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henrysf

@jackkgan Which instructions did you end up following to solve your issue? Were you able to efile your tax return? Did you enter zero for Box 1 in TurboTax? I am having the same issue with IHSS livein provider W2 now. If I skip entering box 12a, and select "Nontaxable Medicaid waiver payments" under "Let’s check for uncommon situations.", TurboTax won't allow me to efile. Thanks in advance.

SharonD007

Review the TurboTax Help article How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax? for instructions to enter your Medicaid waiver payment.

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henrysf

Thanks @SharonD007 I did read https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-w-2/qualified-medicaid-waiver-payments-w-2-show-earned, but my case is slightly different. I don't need Earned Income Credit or Additional Child Tax Credit, but I need to calculate excess social security tax withheld (with mulitple jobs). That said, I need to enter the IHSS W2. Do you think I should follow "If the only entry on your W-2 is in Box 12 (there's a blank or a $0 in Box 1), and you want to use the income to qualify for Earned Income Credit or Additional Child Tax Credit, you can enter the W-2 as is" anyway?

My IHSS W2 is correct, so I don't need a corrected one. In my case, box 1 and box 2 are zero, though boxes 3, 4, 5, 6, 12a (II) have values. That seems to be the same as @jackkgan, so I wonder what @jackkgan ended up doing.