Difficulty of Care for State of Oregon

[michael140]

Hi,

I earned money caring for my son and it was exempt from Federal Taxes thanks to the Difficulty of Care exemption (https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income)

However, it is still showing up as income in my state taxes and I was taxed on the money I earned.  My state is Oregon and they don't tax that income for the same reasons as the federal income.  

Anyway... anybody know how I can make this adjustment in Turbo Tax for my state and get a refund for the taxes I paid?

Thanks!

Michael 

Michael 

[KrisD15 · Accepted solution]

Oregon starts with the federal taxable income.

Since it's not taxed on your federal return, it shouldn't be taxed on your state return. 

If you reported Difficulty of Care income on the federal return, it should have been subtracted on Schedule 1 line 8s and flow to line your 1040 line 8.

Your taxable income is on your 1040 line 15, so the adjustment for the Difficulty of Care is already subtracted before the number Oregon uses. 

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[michael140]

Hi Kris,

Thank you for your help. I realize now I did not explain it well.  Yeah, no worries about the income not counting for Federal and not being part of the State income.  However, my employer withdrew taxes and sent them to the State of Oregon.

My question should really be: "Hey, my employer sent taxes to the State of Oregon for income that was covered under the Difficulty of Care exemption.  How do I get that refunded?"

Any tips for that proper question?

Thanks,

Michael 

[CatinaT1]

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