Under
IRS Notice 2014-7, 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 excludable from
income under § 131 of the Internal Revenue Code. If that's your
situation, you'll want to make another entry in TurboTax to offset the W-2
income you reported under this program.
Please
go to Federal Taxes>Wages &
Income>Less Common Income>Miscellaneous Income>Other Reportable
Income. Answer "yes" on the next screen. On the
screen after that, enter "Tax Exempt income per IRS Notice 2014-7.
Enter a negative number for the amount you were paid under the program.
Please
be aware that it is unclear whether your income is also exempt from FICA and
FUTA tax. Also, the income may still be subject to income taxes by your
state taxing authority.