If your W-2 shows "00" in all boxes except Box 12a, the amount in Box 12a with code "II" represents Medicaid waiver payments. These payments are generally excludable from gross income under IRS Notice 2014-7.
Here’s how to handle them in TurboTax:
- Sign in to TurboTax and open your return.
- Click on the pencil icon next to W-2 to begin entering your information.
- Input all details from your W-2 as they appear.
- If Box 1 is zero, leave it blank or enter zero.
- Ensure Boxes 3 and 5 reflect the amounts shown on your W-2.
- After entering your W-2, TurboTax will prompt you with "Let's check for uncommon situations."
- Check the box labeled "Nontaxable Medicaid waiver payments."
- When prompted, enter the total amount of difficulty of care payments you received from IHSS.
- This amount should match the figures in Boxes 3 and 5 of your W-2.
By following these steps, TurboTax can handle your tax-exempt Medicaid waiver payments. For detailed guidance, refer to TurboTax's support article: How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax?
