Medicaid Waiver Payments

Forum|Forum|3 years ago
March 4, 2023
1 reply
9 views

I received Difficulty of Care (IHSS) payments for 2022. I did not receive a W-2 or 1099, nor were any taxes withheld. Do I HAVE to report this non-taxable income under the 'Miscallaneous Income / Other Income not already reported on a Form W-2 or Form 1099' section?. TT seems to indicate that reporting this is voluntary "...and you want to include such payments...".

When I do report it, although it is backed out on Schedule 1 and Form 1040, the EITC is greatly reduced vs. when not reporting it. Just want to be on the right side of the IRC here.

Best answer by Monikak11

If the IHSS payments you received qualified as "difficulty of care" payments as explained in IRS Notice 2014-7, they may be excluded from income. If you didn't receive a Form w-2 or 1099, and you have confirmed the payments meet the criteria for exclusion, then you don't have to enter them on your return.

You may choose to include all (or none), but not part, of these payments in earned income for determining the EIC or the ACTC, if these payments are otherwise earned income (wages or income from self-employment).

See here for questions and answers from the IRS on this topic.

Monikak11Answer

Level 2

See here for questions and answers from the IRS on this topic.

RumpelstilschenAuthor

Level 3

@Monikak11 - Thank you for your thorough response!

Yes, these payments meet the criteria of IRS Notice 2014-7. It's just that the words "You may choose to include...." when it is in the filers financial favor to do so seem out of character when talking about IRS regulations :-).