Difficulty of care payments

Forum|Forum|1 year ago
February 6, 2025
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I have a W-2 with difficulty of care payments and box 1 is has an amount much lower than the gross wages for NJ state income. I understand that NJ doesn’t tax difficulty of care wages but how do I remove those wages using Turbo Tax and should I enter the amount from box 1 as federal wages since I’m assuming that is the taxable amount even though the IRS doesn’t tax difficulty of care payments either. Turbo tax did have a section to remove more than one line of state income but I only have one line so it wouldn’t allow it.

Not A Product Question

Hal_Al

Employee

Q. How do I remove those wages using Turbo Tax (TT)?

A. TurboTax does that automatically. After entering your W-2, you will reach a screen titled "Let's check for uncommon situations". Check the box "non taxable medicare waiver payments that qualify as difficulty of care payments"

Q. Should I enter the amount from box 1 as federal wages.

A. Yes. As stated, TT does the required adjustment

See:

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=ltp09al6

The IRS has provided a place to deduct (line 8s of Schedule 1) the nontaxable income (but still allow you to claim the Earned Income credit based on that income)