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Level 2
January 29, 2020
Question

IHSS Tax Exempt - Can't E-file with W2 having $0 in Box 1

  • January 29, 2020
  • 139 replies
  • 602 views

I have income, as an IHSS provider, that is tax exempt.  My W2 seems to be correct, in that it's showing $0 for Box 1 and 2, however Turbotax won't let me E-file for that reason.  Am I able to use the alternate method to file by entering the income as Less Common/Misc Income so that I can still E-file?

 

I have $0 in Box 1 and 2, but I do have Social Security Tax and Medicare withheld in Boxes 4 and 6.

    139 replies

    GiseleD
    Level 14
    January 29, 2020

    A workaround for this is to enter $1.00 in Box 1 when making your W-2 entries. This should prevent the IRS from rejecting the e-file. You will be taxed on an extra dollar, but you are avoiding the cost of stamps and printing your return. 

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    ajtoffAuthor
    Level 2
    January 29, 2020

    Ah, I didn't realize this was allowed, thanks, might make it easier. 

    Level 15
    January 29, 2020

    If your income is exempt and you didn't have any tax withheld, then you can just leave the W-2 off of your tax return, provided your tax does not change when you remove it.

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    Level 2
    January 23, 2021

    Won't the IRS kick it back, due to it NOT matching what the W-2 says, if you enter $1.00 in the WAGES box to get it to take, but the wages actually show ZERO?  Last year when I used Turbo tax I was wondering how do to this also.  I ended up mailing it in, and due to COVID it took until JULY to get the refund.  Even though I mailed it on January 31st.  I just don't want it to get rejected, and then have to resubmit, and end up having to mail it anyway.  I'm trying to find out if someone has actually done that before.  With over 400 THOUSAND IHSS provider's in California, there must be someone who has done it this way, and can confirm...  😁😁😁

    Level 2
    January 23, 2021

    Hello, did you end up taking the experts advise and putting the $1.00 in the WAGES box, so you could E-file?  I'm in the same dilemma, but I want to make sure the IRS won't reject it because it doesn't actually match the W-2.  Because the W-2 shows ZERO in wages.  I just don't want it to get rejected, and then I have to end up sending it by mail anyway.  I'm trying to find someone who ACTUALLY E-filed their IHSS taxes doing the $1.00 wage thing, and was SUCCESSFUL with it.  Thanks...

    CatinaT1
    Level 15
    January 25, 2021

    If your W-2 shows $0 in box one, you do not need to enter the W-2 at all.  If you have an amount in box one, follow these instructions.

     

    TurboTax can exempt income under Notice 2014-7 per the IRS instructions. This Notice provides that certain payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program, are difficulty of care payments and excludable as income. 

     

    If these payments are paid to you in box 1 of form W-2 (they should not), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, follow these steps: Do not enter the W-2 in the Wages & Salaries topic. Instead enter it as Other Reportable Income under the Miscellaneous Income section. Take the following steps: 

    1. Sign in to TurboTax Online, click Continue your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);
    1. Click on Federal Taxes at the top of the screen;
    2. At the bottom of Your Income box pick the option in blue to help me add other income, then jump to full list;
    3. Scroll down the page to the last section titled: Less common Income and click show more;
    4. Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
    5. Scroll down to the last option titled Other reportable income and select start or edit;
    6. When it asks, "Any other reportable income?" say yes then you will make two entries:
    7. Your first entry description would be W-2 EIN # (enter EIN number from W-2) Box 1 Medicaid Waiver Payments, and enter the Box 1 amount as a positive number.
    8. Next you click "Add Another Miscellaneous Income Item," and enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number. 

    This both shows and explains removing the W-2 income, placing a zero on Line 21 of your Form 1040. 

     

    If your W-2 has federal or state taxes withheld, you can enter these amounts in the Deductions & Credits section under Other Income Taxes as Withholding not already entered on W-2.

     

    For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.

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    Level 2
    January 25, 2021

    Hello, now I'm even more confused 😁.  I just needed to know if "putting the $1.00 in the WAGES box, so you could E-file, actually had worked for People.  Because I'm in the same dilemma.  But I wanted to make sure that the IRS won't reject it because it doesn't actually match the W-2.  Because the W-2 shows ZERO in wages.  I DO have to show social security and Medicare taxes being taken out.  I KNOW how to do that.  I also KNOW how to OFFSET the wages for the "IRS Notice 2014-7 excludable income".  I JUST need someone to verify about the "$1.00 added to the wage box, so the E-file will go through"..  Thank's...

    Level 2
    July 30, 2022

    I claimed my wages that they put on box 3 n was investigate by the irs because i claimed the stimulus i had already received n since they didn't hear from before the date on the letter they send my taxes to Audit department request proof of income cus it shows 0 on line 1 n 2 if it wasn't for that stimulus i would off been lucky but no mow waiting to see what they say by submitting my last check stub it instead n proof that i had always filed the same amount of wages

    Level 2
    October 14, 2022

    I'm trying to file my 2021 return, and I have the same question. What has worked for anyone in this situation? I'm trying to avoid having to mail in my return. I'm trying to make the 10/17/22 extended deadline, too.

     

    I have $0 for wages because I'm a live-in provider. But Box 3-6 have numbers in them, and they're for Social Security & Medicare wages & tax withheld.

     

    Can I use the $1 method? Can we offset the $1 elsewhere so it can successfully e-file? 

    VolvoGirl
    Level 15
    October 14, 2022

    You don't have to enter that W2 at all.  Delete it.  Do you have other income?  You may not need to even file.  If you want to efile you can enter $1 of interest.  Make up a fake 1099INT.  It won't be taxable but should let you efile.  

    Level 2
    October 14, 2022

    Yes, I have some INT and some rental income. There's Medicare & Social Security wages/taxes withheld, and I believe I need to report that in order to get a refund. 

    Level 6
    March 25, 2024

    If:

    • you don't have any dollar amounts on your W-2, 
    • you qualify to exclude the income under IRS Notice 2014-7, and
    • you don't expect to qualify for Earned Income Credit or Additional Child Tax Credit, then you don't need to enter the W-2 at all.

     

    If your IHSS W-2 has a zero in Box 1, but you do have a  dollar amount in Box 3, Social Security Wages, then you can enter the W-2 following the instructions in the revised help article:

     

    1. Sign in to TurboTax and open your return.
    2. Select Search, enter w-2, and select Jump to w-2.
    3. Enter all your W-2 info as shown on your form, except Box 1 (this is assuming that the W-2 Box 1 is blank or zero).
    4. Enter the amount reported in box 3 of your W-2 in Box 1.
    5. On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.
    6. Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.
      • This is the same amount reported in boxes 3 and 5 of your W-2.
      • Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.
    7. When you get to the Earned Income Credit section in Deductions and Credits, we’ll ask if you want to add your Medicaid waiver payment to your income for this credit. You can answer based on what benefits you most.
    Level 2
    March 26, 2024

    In the case of W-2 has a zero in Box 1 but has a dollar amount in Box 3:

     

    You've restated the steps to follow that lead to my initial inquiry which is:

     

    I am seeing that regardless of following the proper steps of checking the uncommon situation - Nontaxable Medicaid waiver payments under uncommon situations - turbo tax still at the very end does not permit a $0 wage box 1 w-2 to e-file. 

     

    Is this a bug in the system or is what you're suggesting just not the correct step to follow?

    MarilynG
    Level 15
    March 26, 2024

    Enter the amount shown in Box 3 of your W-2 into Box 1 in TurboTax, as @Monikak11 stated above, and you should be able to Efile.

     

    @ssolieman 

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