I am a 70 year old woman caring for her disabled adult son. I received nontaxable Medicaid waiver payments according to Notice 2014-7 and also SS benefit and some interest from retirement accounts.

My question is regarding the Social Security benefit Worksheet:   when you calculate the taxable part of social security benefit, do you have to add in line 3 of the worksheet the nontaxable Medicaid waiver payment?

I know the Medicaid waiver payment is not added to the adjusted income, but taxable SS benefit is and it is not clear to me if I should add or not the Medicaid payment to the other sources of income (line 3= lines 1z+2b+3b+4b+5b+7+8), since line 8 is negative income showing the Medicaid nontaxable payments.

I know it is not a common situation/interest, but for me it is a lot of time consuming with no result until now.

Thank you,