How to enter 1099-NEC as Medicaid Paid Caregiver?

[Michael16]

My spouse received income in 2025 as a paid caregiver through our state's Medicaid program. This income isn't generally taxable under IRS Notice 2014-7 (Difficulty of Care Payments). She received a 1099-NEC for this income.

When entering the 1099-NEC in TurboTax, I assume I simply select the radio button for "Medicaid waiver payments that qualify as difficulty of care"? That should remove any federal/state tax obligation?

[DaveF1006 · Accepted solution]

Yes, that's correct. Assuming you enter this income under other common income, and then selecting that radio button, the program will report the entry as income on Line 1D on the 1040 but then will offset on line 8S on Schedule 1.