- If you got an IHSS W-2 and Box 1 is zero, you don't include that W-2 on your tax return. IRS Notice 2014-7 provides that 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 and excludable as income.
- If your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Other Income Taxes as Withholding not already entered on W-2. You do NOT also include the SS & Medicare taxes in boxes 4 & 6.
For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.
