Get your taxes done using TurboTax

The payments you receive are Difficulty of care payments and can be excluded from taxable income according to IRS Notice 2014-7.

If you received a form W-2, then enter that form in TurboTax just like a normal W-2.

Then you will exclude the income by reversing the amount of the income reported in box 1 of form W-2 in Other Income.

To do so, open your return and follow these steps:

1. Click on Federal in the left-hand column, then on Wages and Income on top of the screen
2. Scroll down to locate the Less Common Income section
3. Click Show more and click Start next to Miscellaneous Income at the bottom
4. On the next page, click Start next to Other Reportable Income.
5. In the "Description" section, enter "IRS Notice 2014-7 excludable income" and in the "Amount" section, enter the W-2 box 1 amount (or amount of Medicaid Waiver Payments) as a negative (-) number

For years 2018, 2019 and 2020, you can amend your returns to obtain a refund of taxes.

Please see this TurboTax article for instructions on how to amend your tax return in TurboTax.