Make a separate negative entry as follows:
- In Income go to the Less Common Income section and select Start next to Miscellaneous Income, 1099-A, 1099-C.
- On the next screen, select Start next to Other Reportable Income (last item in list) and answer Yes on the next screen.
- Enter the description IRS Notice 2014-7 excludable income and enter the W-2 box 1 amount as a negative (-) number. This places an offset on line 8 of Schedule 1, making the income not taxed, but still eligible for EIC.
A requirement, for the income exclusion, is that you live with the care recipient .
Notice 2014–7
This notice advises taxpayers that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver program are difficulty of care payments excludable from gross income under § 131 of the Code. The exclusion may apply whether the care provider is related or unrelated to the individual receiving care.
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