Deductions & credits

Form 1099-MISC, Box 3:Generally, amounts reported to you in Box 3 of Form 1099-MISC are reported on Form 1040, Line 21 as other income. However, if you choose to apply the Notice to payments received in 2016, you would not include the payments on Line 21. If you are filing electronically, do not report the Form 1099-MISC. If you file a paper return, write "Notice 2014-7" to the left of Line 21.
Form 1099-MISC, Box 7:Generally, amounts reported to you in Box 7 of Form 1099-MISC are reported on Schedule C as business income. If you choose to apply the Notice to payments received in 2016, you will enter the income on Schedule C through the Form 1099-MISC, but will also report the excludable amount as a Schedule C expense.

To enter the Form 1099-MISC, Box 7 income on Schedule C:

1. From within your TaxAct® return (Online or Desktop), click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
2. Click Form 1099-MISC to expand the category and then click 7-Nonemployee compensation
3. Select Schedule C, Profit or Loss from Business and then click Continue. Note, if you have already created a Schedule C, click Add to create a new copy of the form or click Review to review a form already created. If not, the program will proceed with the interview questions for you to enter or review the appropriate information.

Once you have entered the Form 1099-MISC income, the program will bring you through additional screens to complete the Schedule C. To enter the excludable amount as an expense, continue to the screen titled Business Income - Expenses, and click Yes. Continue to the screen titled Business Income - Expenses with an entry field for Qualified Medicaid waiver payments exclusion (Notice 2014-7). Enter the excluded amount on this screen.

1. From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
2. Click Wages and Salaries to expand the category and then click Wage income reported on Form W-2
3. Click Add to create a new copy of the form or click Review to review a form already created 
4. Click Quick Entry or Step-by-Step Guidance
1. If you select Quick Entry, fill in the form to match your paper copy of Form W-2 and be sure to scroll down to answer questions.
2. If you select Step-by-Step Guidance, the program will proceed with the interview questions for you to enter or review the appropriate information.

To enter the adjustment on Form 1040, Line 21:

1. Click on the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
2. Click Other Income to expand the category and then click Prizes, awards and other miscellaneous income
3. On the screen titled Miscellaneous - Amounts Received, enter the excluded amount in the field for Medicaid waiver payments to care provider.