Last year my wife was an IHSS Provider for my mother-in-law who was living in our home in CA at the time. During the CA IHSS Provider sign-up process she elected to have NO taxes withheld on these payments (knowing that there would be no taxes assessed in this situation). She ultimately received a 2023 W-2 with her mother listed as the Employer and "0.00" in ALL the boxes (except box 14 which shows a small amount of CA-SDI).
So in our case, the advice in the TurboTax Help topic to "Enter the amount reported in box 3 of your W-2 in Box 1" does NOT change anything. Also the claim in that Help topic that the amount of Medicaid waiver payments "is the same amount reported in boxes 3 and 5 of your W-2" is NOT correct. She did receive nearly several thousand dollars gross payments (not "0.00") in 2023. But as I understand it, we still need to enter that payment amount in the "Let's check your Medicaid waiver payments" screen. The actual W-2 Form in TurboTax has "Additional Wage and Tax Information" with a "Part X - Medicare Waiver Payments" section and the verbiage there looks right to me. I just hope that TurboTax does the math correctly in our case.
And again, as many have noted in this topic, doing anything here that leaves a "0.00" in box 1 will still prevent you from e-Filing the return. I'm normally religious about entering data from W-2s "exactly as shown". But since the TurboTax Help topic specifically instructs to not do that for these payments, then I suppose it probably won't hurt to just change that 0.00 to 1.00 to be able to e-File? In other words, will the IRS really care?
In any case, just because this "$1 trick" will allow e-Filing, there's no guarantee that it won't trigger a follow-up letter from the IRS, is there? (Being able to blame TurboTax published advice will be little solace if the IRS comes knocking...)
