IHSS Exempt Care Provider

Forum|Forum|1 year ago
January 27, 2025
5 replies
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Hello, I am an EXEMPT Live-in IHSS Care Provider and I am having the hardest time finding an exact answer that I need. I’ve used Turbo tax for many of years and never have I felt so stumped in my life. My entire W-2 is filled with zeros! With an exception of box 12A stating my wages for the year. In my previous years at other employers I never was exempt and never faced this issue. For the year of 2024 my ONLY income is IHSS and I would like to report my income for a tax credit as I have 4 dependents. ( I only keep

seeing advice for those who have additional w-2’s which is not my case) PLEASE HELP! 🙂

DoninGA

Employee

See this TurboTax support FAQ for IHSS W-2 - https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-w-2/qualified-medicaid-waiver-payments-w-2-show-earned/L1XZa89dh_US_en_US?uid=m6f1p2c4

MssninaAuthor

Hello,

Thanks you for Sharing that link with me. However I’m stumped still or just missing something. It states to enter amounts from box 3 and 5. Those amounts are zero so leaves me at a stand still 😞

DoninGA

Employee

If the code in box 12 is II then complete the entry of the W-2 with the information provided on the W-2 received. The amount shown in box 12 will not be entered on your tax return as income.

tlund1232

I am going through the exact same thing. I have always filed with turbo tax with no problems. This change has left me feeling hopeless... I see that even though the income is tax exempt, we can choose to include it for the credit purposes. The problem is figuring out how to input it. Where do we include this info? And after I just continue going through the online process, Turbo tax stated that the code II in box 12 disallows us to e-file and requires me to send it by mail. This is unfair to all ihss live in providers with dependents. And all answers have not been helpful, as they refer to other situations. If you figure this out, please let us know how to do it here. I will do the same. Good luck!

RobbyG2112

Trying to figure this out as well. It seems that all of the replies and other posts I have read are not understanding all of the details here and why this is an issue with TT 2024:

- These payments were previously not reported on a W2, there is a change for this year where a W2 is now issued with zeroes in ALL boxes EXCEPT for box 12 where it shows the payments with a new code "II" which indicates they are Medicaid Waiver Payments.

- When entering this W2 info in TT 2024, it correctly puts the amount on 1040 Line 1d (Medicaid waiver payments) and then subtracts it on line 8 (Other income) so the amount is not included in AGI on line 11. So far so good.

The problem then comes when trying to eFile from TT, it says it cannot eFile because one of the W2's has a zero amount in box 1 and says the return must be mailed.

Is TT aware of this issue and is there some type of update that can be done to fix this issue for those of us with this situation? I saw some posts that says to put $1 in box 1 of the W2 as a workaround but this doesn't seem like a good solution since it won't match what the actual W2 says and could flag the return for review.

Vanessa A

Here is a workaround to the $0 in box 1 for IHSS payments. You can do this instead of entering $1.

Open or continue your return.
Navigate to the W-2 section:
- TurboTax Online/Mobile: Go to W-2.
- TurboTax Desktop: Search for w-2 and select the Jump to link.
Enter all your W-2 info as shown on your form, except Box 1.
If you have a number instead of zero in Box 3, enter that number again in Box 1. If you ONLY have a number in box 12, you can enter it in box 1 as well.
On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments. (If you enter the number in box 12 with code II, you will not see this option, entering it in box 12 will be enough)
Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.
- This is the same amount reported in boxes 3 and 5 of your W-2.
- Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.
When you get to the Earned Income Credit section in Deductions & Credits, we’ll ask if you want to add your Medicaid waiver payment to your income for this credit. You can answer based on what benefits you most.

NOTE: When you enter the income as IHSS payments TurboTax will automatically back out your IHSS payments on line 8 of your 1040. You will see this shown as a negative number so this will NOT be included in your taxable income, however, if you choose it will still be included in your EITC calculations.

@RobbyG2112 (Edited 2/5/2025 @ 5:19PM PST)

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Iamhim

Hello,

I need help. I read on the IRS.gov site that if I live with the person I am taking care of which I do 7 days a week full time. I do not have to pay taxes. I filed a few years ago and the IrS sent me a letter saying I owe for a few years ago.

Do I have to pay since I live with my Brother who I am the FT caretaker of?

How do I go about this?

DawnC

Employee

It depends. You would have received these payments from your state or other Medicaid provider for providing care for someone in the same household. In order to receive these non-taxable payments, you would have had to be approved by your state government.

See this IRS Q & A page - Certain Medicare Waiver Payments may be excludable from taxable income. If you were approved by your state, you should be able to get the IRS to properly classify your income according to Notice 2014-7.

Respond promptly to any notice you receive. The IRS may consider the issue resolved (likely in their favor) if you don’t reply by the date in the notice. How you should respond depends on the type of notice you received. Please see this TurboTax FAQ for more information about the types of notices and how to respond.

What to do when you receive a letter or notice from the IRS

TurboTax Audit Support Center

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idunno3

Hello, oh my goodness I have the exact same situation. My tax person told me today that she's unable to file taxes for me because there isn't income in box 1 (all zeros except for 12a) and that my income isn't taxable. She said it was a change by the irs and they're trying to eliminate us filing for taxes because she said its like double dipping...meaning we don't have taxes withheld so shouldn't be allowed to file. However, she said she doesn't agree with cases like ours where we have other children and should be able to file and claim child tax credit. But she still turned me away... I'm currently on line, you tube, etc trying to find an answer to our question.

Vanessa A

You are able to use the income to claim the Earned Income Tax Credit. If you want to claim the EITC, then you can enter your W-2 following the instructions below. If you do not want to claim the credit, then you do not need to enter the W-2.

I received a W-2 with dollar amounts in Box 1 and “II” in Box 12

If your W-2 includes an amount in Box 1 and Box 12 for tax-exempt Medicare waiver payments from In-Home Supportive Services (IHSS), you should request a corrected W-2 as your payments should only be reflected in Box 12.

If you can't get a corrected W-2, please follow the instructions below:

Open or continue your return.
Navigate to the W-2 section:
- TurboTax Online/Mobile: Go to W-2.
- TurboTax Desktop: Search for W-2 and select the Jump to link.
Enter all your W-2 info in the appropriate boxes in TurboTax as they're shown on your form, except leave Boxes 1 through 8 blank.
TurboTax will include the amount you entered in Box 12 as income on Line 1d of your Form 1040 and will subtract the amount on Line 8. This means you won’t be taxed on these wages on Form 1040.

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.

If the only entry on your W-2 is in Box 12 (there's a blank or a $0 in Box 1) and you don’t want to use the income to qualify for Earned Income Credit or Additional Child Tax Credit, you don’t need to enter the W-2 at all.

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