I followed the updated instructions below but noticed that the Ca state return is incorrect. It is deducting the payments twice on the CA adjustments column B so I think it is a bug that needs to be fixed
I received a W-2 with $0 in Box 1
- Sign in to TurboTax and open your return.
- Select Search, enter w-2, and select Jump to w-2.
- Enter all your W-2 info.
- On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.
- Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.
- This is the same amount reported in boxes 3 and 5 of your W-2.
- Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.
- When you get to the Earned Income Credit section in Deductions and Credits, we’ll ask if you want to add your Medicaid waiver payment to your income for this credit. You can answer based on what benefits you most.
