topic in Get your taxes done using TurboTax

IHSS Exempt Care Provider

Mssnina — Mon, 27 Jan 2025 12:45:47 GMT

Hello, I am an EXEMPT Live-in IHSS Care Provider and I am having the hardest time finding an exact answer that I need. I’ve used Turbo tax for many of years and never have I felt so stumped in my life. My entire W-2 is filled with zeros! With an exception of box 12A stating my wages for the year. In my previous years at other employers I never was exempt and never faced this issue. For the year of 2024 my ONLY income is IHSS and I would like to report my income for a tax credit as I have 4 dependents. ( I only keep

seeing advice for those who have additional w-2’s which is not my case) PLEASE HELP! 🙂

Re: IHSS Exempt Care Provider

DoninGA — Mon, 27 Jan 2025 12:50:54 GMT

See this TurboTax support FAQ for IHSS W-2 - https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-w-2/qualified-medicaid-waiver-payments-w-2-show-earned/L1XZa89dh_US_en_US?uid=m6f1p2c4

Re: IHSS Exempt Care Provider

Mssnina — Mon, 27 Jan 2025 13:09:04 GMT

Hello,

Thanks you for Sharing that link with me. However I’m stumped still or just missing something. It states to enter amounts from box 3 and 5. Those amounts are zero so leaves me at a stand still :(

Re: IHSS Exempt Care Provider

DoninGA — Mon, 27 Jan 2025 13:30:02 GMT

If the code in box 12 is II then complete the entry of the W-2 with the information provided on the W-2 received. The amount shown in box 12 will not be entered on your tax return as income.

Re: IHSS Exempt Care Provider

tlund1232 — Tue, 28 Jan 2025 17:58:03 GMT

I am going through the exact same thing. I have always filed with turbo tax with no problems. This change has left me feeling hopeless... I see that even though the income is tax exempt, we can choose to include it for the credit purposes. The problem is figuring out how to input it. Where do we include this info? And after I just continue going through the online process, Turbo tax stated that the code II in box 12 disallows us to e-file and requires me to send it by mail. This is unfair to all ihss live in providers with dependents. And all answers have not been helpful, as they refer to other situations. If you figure this out, please let us know how to do it here. I will do the same. Good luck!

Re: IHSS Exempt Care Provider

RobbyG2112 — Wed, 05 Feb 2025 19:42:36 GMT

Trying to figure this out as well. It seems that all of the replies and other posts I have read are not understanding all of the details here and why this is an issue with TT 2024:

- These payments were previously not reported on a W2, there is a change for this year where a W2 is now issued with zeroes in ALL boxes EXCEPT for box 12 where it shows the payments with a new code "II" which indicates they are Medicaid Waiver Payments.

- When entering this W2 info in TT 2024, it correctly puts the amount on 1040 Line 1d (Medicaid waiver payments) and then subtracts it on line 8 (Other income) so the amount is not included in AGI on line 11. So far so good.

The problem then comes when trying to eFile from TT, it says it cannot eFile because one of the W2's has a zero amount in box 1 and says the return must be mailed.

Is TT aware of this issue and is there some type of update that can be done to fix this issue for those of us with this situation? I saw some posts that says to put $1 in box 1 of the W2 as a workaround but this doesn't seem like a good solution since it won't match what the actual W2 says and could flag the return for review.

Re: IHSS Exempt Care Provider

Vanessa A — Thu, 06 Feb 2025 01:20:50 GMT

Here is a workaround to the $0 in box 1 for IHSS payments. You can do this instead of entering $1.

Open or continue your return.
Navigate to the W-2 section:
- TurboTax Online/Mobile: Go to W-2.
- TurboTax Desktop: Search for w-2 and select the Jump to link.
Enter all your W-2 info as shown on your form, except Box 1.
If you have a number instead of zero in Box 3, enter that number again in Box 1. If you ONLY have a number in box 12, you can enter it in box 1 as well.
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. (If you enter the number in box 12 with code II, you will not see this option, entering it in box 12 will be enough)
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.
When you get to the Earned Income Credit section in Deductions & 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.

NOTE: When you enter the income as IHSS payments TurboTax will automatically back out your IHSS payments on line 8 of your 1040. You will see this shown as a negative number so this will NOT be included in your taxable income, however, if you choose it will still be included in your EITC calculations.

@RobbyG2112 (Edited 2/5/2025 @ 5:19PM PST)

Re: IHSS Exempt Care Provider

tlund1232 — Wed, 05 Feb 2025 19:59:38 GMT

Please come back in a month and let us know if that $1 in the boxes idea works. I'm sure we are all curious as to how that plays out.

Re: IHSS Exempt Care Provider

CatinaT1 — Wed, 05 Feb 2025 20:21:06 GMT

For future reference:

Here is how you enter this W2 in TurboTax: How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax?

[edited 2.5.25 | 12:20pm pst]

Re: IHSS Exempt Care Provider

RobbyG2112 — Wed, 05 Feb 2025 20:14:09 GMT

Hi, thank you for the reply. In my case we are not trying to claim the amount for EIC and I am only entering it in TT since I didn't want to skip entering the W2 since it was issued this year. In the past we didn't receive a W2 for the Medicaid Waiver Payments so this is the first time running into this issue.

If I put $1 in box 1 of the W2 there is nowhere to put a description like there is for Other Income as you suggested so I am not sure if this would cause a problem or not.

Is there any way that TT can issue a program update for this specific issue that would allow us to eFile normally?

Re: IHSS Exempt Care Provider

RobbyG2112 — Thu, 06 Feb 2025 05:02:07 GMT

Thank you @Vanessa A for the reply on this. In my case box 3 has 0 (all boxes except for box 12 have 0) so if I enter the amount from box 12 to line 1 this will certainly get around the eFile issue, but how do I know that this won't flag my return since the amount will not match the actual W2? And is this actually better than entering $1 instead since in both cases the amount will not match?

The only other option is to not enter the W2 at all (we don't qualify for EIC anyway). I am not sure which of the 3 options is the correct way to handle this and not flag my return.

Editing my reply above since I tried this and it doesn't work correctly. By entering the amount from box 12 to box 1 it ends up adding this amount on Line 1a and also line 1d (from the Box 12 code II) so it counts the amount twice. So even though it gets subtracted on Line 8, my Total Income is increased.

I see the new reply from @KrisD15 indicating that I can exclude the W2 since I don't claim EIC and the IRS won't care. It would be nice to get a consensus from the different Tax Experts in this thread if this is the best way to handle this.

I also just realized that my situation is different than the other posters in this thread who do want to claim EIC so for those people they might still be stuck.

Re: IHSS Exempt Care Provider

KrisD15 — Thu, 06 Feb 2025 04:19:46 GMT

The ONLY reason IHSS Caregivers are getting Form W-2 is in case they wish to use the income for certain credits.

The choice to enter the W-2 is up to the Taxpayer.

The IRS knows what type of W-2 it is and certainly won't care if it isn't reported.

According to the IRS:

"Other types of earned income. Other types of earned income not reported on Form W-2,..."

"...certain Medicaid waiver payments if you choose to include nontaxable payments in earned income for purposes of claiming the EIC, taxable dependent care benefits,"

Re: IHSS Exempt Care Provider

Iamhim — Thu, 20 Feb 2025 01:41:40 GMT

Hello,

I need help. I read on the IRS.gov site that if I live with the person I am taking care of which I do 7 days a week full time. I do not have to pay taxes. I filed a few years ago and the IrS sent me a letter saying I owe for a few years ago.

Do I have to pay since I live with my Brother who I am the FT caretaker of?

How do I go about this?

Re: IHSS Exempt Care Provider

DawnC — Thu, 20 Feb 2025 03:01:36 GMT

It depends. You would have received these payments from your state or other Medicaid provider for providing care for someone in the same household. In order to receive these non-taxable payments, you would have had to be approved by your state government.

See this IRS Q & A page - Certain Medicare Waiver Payments may be excludable from taxable income. If you were approved by your state, you should be able to get the IRS to properly classify your income according to Notice 2014-7.

Respond promptly to any notice you receive. The IRS may consider the issue resolved (likely in their favor) if you don’t reply by the date in the notice. How you should respond depends on the type of notice you received. Please see this TurboTax FAQ for more information about the types of notices and how to respond.

What to do when you receive a letter or notice from the IRS

TurboTax Audit Support Center

Re: IHSS Exempt Care Provider

xianding — Tue, 18 Mar 2025 19:20:16 GMT

Hi,

i would like to confirm that for IHSS live-in providers

case 1:

if i only have a number in 12II for example $3000 and other boxes are zero, do you mean i need to enter $3000 in box 12 and select II, that would be good enough? not need to enter this amount in box1?

case 2:

if i have 12 II and box 3,4,5 and 6 have a number (box3,5 and 12 II are the same number, for example $2000), and other boxes are zero, should i enter $2000 into box1 and edit to check"uncommon situations, then select "nontabxable medicaid waiver payment"?, i saw other expert answer leave box 1 blank. not sure who should i follow.

Re: IHSS Exempt Care Provider

DaveF1006 — Tue, 18 Mar 2025 23:11:21 GMT

Yes, report this in this manner so that the exclusion appears correctly on your 1040.

Record the amounts of say $2000 in Boxes 1,3,5. Leave Box 12 blank.
Now go to "uncommon situations, then select "nontaxable Medicaid waiver payment" and enter the amounts correctly as directed.
Now, this will appear as taxable income on Line 1 on your 1040 but then is excluded on Line 8 of the 1040.

I have seen posts that have said to record income in Box 1 and then make an entry in Box 12 but what this ends up doing is adding your income in Line 1A of the 1040 and then again in Line 1D of the 1040, thus doubling the income. Then there is an adjustment on line 8 for the amount of the Medicare waiver payments, but then you are still reporting income of $2000 after this is done.

The only other option in this case is to place a "zero" in Box 1 but then you won't be able to efile. In addition, you wouldn't be able to use this income for important credits like the EITC, child tax credits, retirement contributions, or other credits that you may be entitled to.

Re: IHSS Exempt Care Provider

idunno3 — Thu, 03 Apr 2025 03:49:21 GMT

Hello, oh my goodness I have the exact same situation. My tax person told me today that she's unable to file taxes for me because there isn't income in box 1 (all zeros except for 12a) and that my income isn't taxable. She said it was a change by the irs and they're trying to eliminate us filing for taxes because she said its like double dipping...meaning we don't have taxes withheld so shouldn't be allowed to file. However, she said she doesn't agree with cases like ours where we have other children and should be able to file and claim child tax credit. But she still turned me away... I'm currently on line, you tube, etc trying to find an answer to our question.

Re: IHSS Exempt Care Provider

Vanessa A — Thu, 03 Apr 2025 13:10:46 GMT

You are able to use the income to claim the Earned Income Tax Credit. If you want to claim the EITC, then you can enter your W-2 following the instructions below. If you do not want to claim the credit, then you do not need to enter the W-2.

I received a W-2 with dollar amounts in Box 1 and “II” in Box 12

If your W-2 includes an amount in Box 1 and Box 12 for tax-exempt Medicare waiver payments from In-Home Supportive Services (IHSS), you should request a corrected W-2 as your payments should only be reflected in Box 12.

If you can't get a corrected W-2, please follow the instructions below:

Open or continue your return.
Navigate to the W-2 section:
- TurboTax Online/Mobile: Go to W-2.
- TurboTax Desktop: Search for W-2 and select the Jump to link.
Enter all your W-2 info in the appropriate boxes in TurboTax as they're shown on your form, except leave Boxes 1 through 8 blank.
TurboTax will include the amount you entered in Box 12 as income on Line 1d of your Form 1040 and will subtract the amount on Line 8. This means you won’t be taxed on these wages on Form 1040.

If the only entry on your W-2 is in Box 12 (there's a blank or a $0 in Box 1), and you want to use the income to qualify for Earned Income Credit or Additional Child Tax Credit, you can enter the W-2 as is.

If the only entry on your W-2 is in Box 12 (there's a blank or a $0 in Box 1) and you don’t want to use the income to qualify for Earned Income Credit or Additional Child Tax Credit, you don’t need to enter the W-2 at all.

Re: IHSS Exempt Care Provider

Chlo3tran — Wed, 24 Dec 2025 05:00:59 GMT

Please confirm IRS new law:

The IRS now requires all IHSS and WPCS providers to report their income, even if they filed the SOC 2298 form. While this income remains non-taxable, providers must include it on their tax forms starting in the 2024 tax season.

Chlo3tran — Wed, 24 Dec 2025 05:10:16 GMT