How do I ammend my 2021 return for 2014-7 income.

[ed57gmc]

I just found out that my wife's income for IHSS is exempt for income. I had entered the W-2 (the income was listed in box 1), so now I need to fix the problem. I found in the forum that I can add a line with a negative number, but don't know where.  I have started the amend process in TurboTax, but  what form should I add?

[DawnC · Accepted solution]

Make a separate negative entry as follows:

1. In Income go to the Less Common Income section and select Start next to Miscellaneous Income, 1099-A, 1099-C.
2. On the next screen, select Start next to Other Reportable Income (last item in list) and answer Yes on the next screen.  
3. Enter the description IRS Notice 2014-7 excludable income and enter the W-2 box 1 amount as a negative (-) number.   This places an offset on line 8 of Schedule 1, making the income not taxed, but still eligible for EIC.

A requirement, for the income exclusion, is that you live with the care recipient .  

Notice 2014–7 

This notice advises taxpayers that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver program are difficulty of care payments excludable from gross income under § 131 of the Code. The exclusion may apply whether the care provider is related or unrelated to the individual receiving care.

[ed57gmc]

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@DawnC wrote:

Make a separate negative entry as follows:

1. In Income go to the Less Common Income section and select Start next to Miscellaneous Income, 1099-A, 1099-C.
2. On the next screen, select Start next to Other Reportable Income (last item in list) and answer Yes on the next screen.  

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But I am in the amend process and there is no Income section. I only see that I can switch to Forms and add a form. I don't know which form to add,

[JamesG1]

These two entries that you describe are reported on IRS Form 1040 Schedule 1 Additional Income and Adjustments to Income on line 8z.

Schedule 1 line 10 transfers to IRS Form 1040 line 8.

The entries are:

IRS Notice 2014-7   10.00

IRS Notice 2014-7  -10.00

[ed57gmc]

Thanks. Since I already reported the W-2, I suppose I just need to enter the negative number only? 

[DawnC]

Yes, just do the negative entry part since the W-2 is already entered.    You can enter it through the interview mode even if you are preparing an amendment.   In TurboTax desktop, click on Wages & Income or Personal Income depending on your version. 

[ed57gmc]

Thanks. The picture helped. I was just starting the amendment and it didn’t look like that. 

[ed57gmc]

OK, I've entered the necessary lines, but I have some additional questions.

When I discovered the info about 2104-7, I had e-files my federal, but not the state. I owed $1700 on federal and $1000 on state. I have not yet sent in the payment for the original federal. So question one, do I still need send in the $1700 federal or will they just send me back the difference? Similar for the state, but since I never mailed the return, do I need to send both?

[DMarkM1 · Accepted solution]

To complete the federal amendment you will be asked if you already paid an amount.  Be sure to indicate that you did not pay.  If the amendment then results in a refund, you do not need to send in the $1700 that you originally owed.  If the amendment just reduced the amount you owe then just send in the reduced amount by 18 Apr.  

For your state return.  The updates you made to your federal return will transfer to your state return.  Go the through the state interview before filing the amendment to ensure the updated adjusted gross income transferred correctly.  If so you can then e-file your state return as well.

You can see a summary of state return to view the Federal Adjusted Income that transferred to your state return to be sure it matches the new adjusted gross income on your amended 1040.

1. "Tax Tools" in the left hand menu

2. "Tools"

3. "View Tax Summary" in the main screen

4. "XX state summary" in the left hand menu

[ed57gmc]

Thanks. I’ll check it out this evening. 

[ed57gmc]

It didn't ask me how much I had paid with the original return, but thanks to your heads-up, I was able to find it on the federal and state forms.