Medicare Wavier Payments Taxable?

Forum|Forum|7 years ago
June 3, 2019
1 reply
18 views

Notice 2014-7 pymts from Medicaid Waiver Svcs Pgms are excluded from gross income, yet my state reported them on 1099-Misc box 6. I care for my disabled son, I'm not a business, nor do I provide medical or health svcs. IRS pub states to enter 0 on line 21 on Form 1040 for these pymts & enter "Notice 2014-7” on the dotted line. Is this the correct way to documented it on our taxes on TT? This is my first year to receive payments.

TurboTax Premier Mac

KittyM

Level 10

Truthfully, you should not be getting a W-2 or 1099 for this income. Since you did, you will have to report the amount on this 1099-MISC as income, because it's being reported to the IRS. (It will appear on your Form 1040, Line 21 Other Income.) Then you will make a second entry to zero out the income.

To report the income:

In your Federal return, choose the tab for Wages & Income
Scroll down to Other Common Income and Show more
Start/Revisit Form 1099-MISC
Type in the reason for your 1099-MISC (Medicaid Waiver Payments)
Indicate the reason for your payment on the next page (none of these apply)
On the following page indicate that it does not involve work like your main job and Continue
Indicate the year received and Continue
That it did not involve an intent to make money and Continue
And is not a recurring payment (received in the past or expected in the future).
The income will be reported on line 21 of your return.

To enter the exemption from income:

Scroll down to Less Common Income and Show more
Start/Revisit Miscellaneous Income and choose Other reportable income
Say Yes to continue to the screen "Other Taxable Income". Enter the description "Notice 2014-7" as and the amount as a negative number.

A corresponding negative amount will be entered, and line 21 will be zero. You may not see any of this on Line 21 of your return, but it will be transmitted to the IRS.

You should discuss with your state that these payments are not to be reported to you as income in the future, as they are not.