Tax exempt income Washington state

Forum|Forum|3 years ago
January 25, 2023
1 reply
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Hi there! I am here to inquire about Medicaid waiver 2014-17. I was working for DSHS as an HCA, and in April 2022 we got a new contract with a new company CDWA. Since the new contract they do not take out FIT due to a difficulty of care rule that was implemented in 2017 in Washington State. Before they took over, DSHS always did take out FIT. My question is- should I amend my last 2 tax returns to reflect this? I’m not sure what to do. I think I filed correctly for 2022 based on the 2 W2’s I received, but it’s saying that I can’t E File for 2022. I haven’t finished 2022, because that’s my second question- how can I EFile for 2022? Thanks so much!

Ask the Experts - Tax Law Changes - Jan 2023

Monikak11

Level 6

If your employer didn't deduct Federal income tax from your pay because the earnings were determined to be nontaxable difficulty-of-care Medicaid payments, and you didn't have any taxable source of income, then you would have no refund due and no Adjusted Gross Income, which is why TurboTax determined that your return can't be e-filed.

If your prior contract employer deducted Federal income taxes, and you correctly filed a return to claim a refund of those taxes, then you do not need to amend your prior returns to remove the taxes withheld.

If you receive a Form W-2 that shows the difficulty-of-care payments as gross income in Box 1, follow the steps in this help article to enter the W-2 and identify the wages as difficulty-of-care payments.

For more information about why some returns can't be e-filed, click on this help article.