Hello! This doesn't seem right. When you get a W2 with 0 in box 1, that means you haven't been taxed for the Social security and Medicare wages listed in boxes 3 and 5 of the W2, and don't need to pay taxes on that amount either. However, when you put $1 in box 1 and indicate rest of the Social security / Medicare wages as difficulty of care payment received from IHHS, the taxable income for CA on the return form gets adjusted by the amount in box 3 and 5 (Social security / Medicare wages). For example, if the amount in box 3 and 5 is $10,000, the taxable income on the CA tax return form gets decreased by $10,000. This ends up in a bigger tax refund for the CA portion. This doesn't seem right since you're reporting $1 income and getting $10,000 deducted from the total income. I have a W2 from a different job as well and the $10,000 gets deducted from my adjusted gross income for CA taxes when I follow what is being recommended. If I put $10,000 in box 1, then indicate $10,000 as difficulty of care payment received from IHHS , that adjustment doesn't happen. I feel like putting $0 or $1 in box 1 with the $10,000 for difficulty of care payment received from IHHS is going to cause issues. What's the correct way to do this? Am I missing something? The reason I want to include the W2 with 0 in box 1 is to get a refund of the excess social security taxes I have paid.
