Thank you so much Vanessa A ! I tried both methods.
I request help in choosing from these 2 options. Option 1 increases my taxes as I will lose the credit for medicare, social security and CA VPDI. My main question is whether IRS will be unhappy if used the previously recommended option 2 to include the IHSS W2 by copying box 3 to box 1 and choosing Nontaxable Medicaid waiver.
1) Option 1: Delete my Live-in-provider IHSS W2 for completely as I won't qualify for Earned Income Credit.
- Pros: Probably no risk.
- Cons: My taxes owed will increase by $2000 as I will lose the credit for a) Medicare Box 6 (Form 8959 line 19) : Added (line 23 of 1040), Excess Social Security Withheld : Added W2 Box 4 (1040 line 31, 32) and CA VPDI from box 14 (540 CA adjustments Line 5a Col B)
2) Option 2:
- Pro: Reduces taxes by $2000 if I include my W2 and follow the previously recommended procedure which was to enter Enter your Box 3 amount into Box 1 of your W-2 (reported as $0), and choose 'Nontaxable Medicaid waiver payments that qualify as difficulty of care payments' on the Uncommon Situations page, on the following pages indicate that 'all of it' in Box 1 is for difficulty of care payments, and that you did not get any other difficulty payments that are not in Box 1
- Con: Will IRS be ok with the above of copying box 3 to box 1 and taking credit on Medicare, social security and CA VPDI?
