topic Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income in Get your taxes done using TurboTax

Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

next_milenium — Thu, 24 Dec 2020 22:46:09 GMT

I am an IHSS provider with live-in client. This makes the income tax exempt. My W2 is correct and shows $0 for Box 1 and 2. But I do have Social Security Tax and Medicare withheld in Boxes 4 and 6.

Since box 1 contains $0, Turbotax won't let me E-file. I'd like to E-file for convenience and receiving my refund faster.

I've searched this forum and there seems to be 3 different recommended ways to get around this:

1) Enter the income as Less Common/Misc Income.

2) Enter $1.00 as income in box 1.

3) Don't bother reporting the W-2 because my income is exempt anyways.

So, which way should I go? Will any of the above workaround trigger IRS audit? Any recommendation from the experts would be greatly appreciated. Thank you.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

macuser_22 — Thu, 24 Dec 2020 23:05:56 GMT

Since SS and Medicare does not go on a tax return and the IRS does not want a W-2 with zero in box 1 then there is no reason to even enter the W-2, but what are your trying to do. It is way too early to file a 2020 tax return - the IRS will not start accepting 2020 tax returns until after Jan 27, 2021 and 2019 and earlier returns can no longer be e-filed at all - for anyone.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

next_milenium — Thu, 24 Dec 2020 23:44:29 GMT

Thanks for your reply.

I'm not trying to file now or early. I ran into this situation this year so I'm just trying to prepare better for next year.

If I leave W-2 out, will that some how trigger alert for IRS?

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

Critter-3 — Fri, 25 Dec 2020 01:13:12 GMT

Leaving off the Zero income W-2 is the correct thing to do according to IRS rules.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Sat, 17 Feb 2024 22:39:33 GMT

I need to add my IHSS w-2 though since I'm overpaying my social security tax (I'd a regular job also).
I don't like the changing to $1 solution and printing to paper and snail mail file seems wasting paper and also prone to errors.
And this year seems we still have the same limitation of can't e-file.
Argh no good solutions.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

MonikaK1 — Sat, 17 Feb 2024 22:50:54 GMT

You can enter your IHSS W-2 in TurboTax even if it has a zero in Box 1 and e-file your return.

If you receive a W-2 for IHSS / Difficulty of Care / Medicaid Waiver payments addressed by IRS Notice 2014-7, and you have amounts in Boxes 3 through 6, you should enter the W-2 in TurboTax in the W-2 section.

If there is a zero in Box 1, follow these steps:

Sign in to TurboTax and open your return.
Select Search, enter w-2, and select Jump to w-2.
Enter all your W-2 info.
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.
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 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.

Before this procedure was available in TurboTax for payments reported on a W-2, there was another method where the payments were reported under Miscellaneous Income. Steps for both are covered under the current TurboTax help article.

See this IRS FAQ page for more information regarding Medicaid Waiver payments.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Sun, 18 Feb 2024 21:28:22 GMT

thanks for the help, but I do have some questions about what you'd suggested, I presume using the method you suggested I should only enter my "normal" w-2 (let's say it's from A Inc.) and would not enter the $0 incoming w-2 from ihss, and then select non-taxable medicaid wavier payments, however if I did that TurboTax would then ask me how much of the $ in box 1 from A Inc is difficult of care payment and the amount, which does not seem correct since it's not from A Inc.

>> Enter the total amount of difficulty of care payments you received from A Inc .

If I select "none of it" and put $0 as amount of difficult care I received from A Inc, then it will not ask for any additional info and no change in refund.
If I add a second w-2 with $0 and select medicaid waiver payments, I can enter the proper amount and got some more refund (due to overpaid social security taxes etc) but then I got the same issue of not being able to efile because box1 of a w-2 is $0.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

JamesG1 — Sun, 18 Feb 2024 22:01:35 GMT

You would enter the W-2 from A Inc as well as the W-2 from IHSS for $0.

You do not select Nontaxable Medicaid waiver payments... for the W-2 from A Inc.

You do select Nontaxable Medicaid waiver payments... for the W-2 from IHSS.

.You should be able to Review and file the tax return electronically.

@waver123

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Sun, 18 Feb 2024 23:05:39 GMT

Thanks I enter ihss as a 2nd w-2 with box1 is 0 and clicked Nontaxable Medicaid waiver payments, but at review sections it still says can't e-file due to box1 less than $1.

"It looks like you have a tax situation in your federal return that makes it ineligible for e-filing, according to IRS rules.
Here are the details:
One of the W-2s doesn't have an amount in box 1 or the amount is less than $1. If there is an extra W-2 added to the return by mistake, delete the extra form. Otherwise, the return must be filed by mail."

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

MonikaK1 — Sun, 18 Feb 2024 23:14:40 GMT

Thank you for the update.

I would like to take a closer look at this situation, as the solution we posted, entering zero in box 1, had previously been working for other users.

To help us troubleshoot this, you can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions for TurboTax Online users:

Go to the black panel on the left side of your program and select Tax Tools.

Then select Tools below Tax Tools.
A window will pop up that says Tools Center.
On this screen, select Share my file with Agent.
You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number.
Reply to this thread with your Token number. This will allow us to open a copy of your return without seeing any personal information.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution.

If you are using TurboTax Desktop please comment back and I will give you those instructions.

After sending the diagnostic file -

You can enter $1 instead of $0, which should clear the error and allow you to e-file.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Sun, 18 Feb 2024 23:27:47 GMT

Hi I'm using the desktop version (premier) not online version though.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

MonikaK1 — Sun, 18 Feb 2024 23:30:33 GMT

Thank you; here are the instructions to share your file for Desktop users:

From the black bar at the top of your screen, select Online
Click Send Tax File to Agent
Click Send on the message that pops up
TurboTax will create a "sanitized" copy of your return information with no personal info
Post the 7-digit token number here in this thread

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Mon, 26 Feb 2024 04:38:34 GMT

thanks, here's the token 1195200.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

MonikaK1 — Mon, 26 Feb 2024 16:04:06 GMT

Thank you; I will review the file and post again on this thread.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

MonikaK1 — Mon, 26 Feb 2024 17:05:52 GMT

I have reviewed the file. I see now that entering $0 in Box 1 does create an error in the final review.

To resolve the error, enter $1 in Box 1 for the IHSS W-2. Select Nontaxable Medicaid waiver payments for the W-2 from IHSS as before.

You will see a follow-up screen (see screenshot below)

Select the radio buttons as shown, that all of the $1 is difficulty of care payments, and that you got more difficulty of care payments that weren't in box 1. Enter the total payments not included in box 1 in the box provided.

This will resolve the error that prevented e-filing, and allow you to get the excess SDI credit.

Thank you for reporting this issue. I will elevate the issue, and that the TurboTax help article should be reviewed for revision.

@waver123

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

Ag4747 — Fri, 01 Mar 2024 02:07:18 GMT

Hello! This doesn't seem right. When you get a W2 with 0 in box 1, that means you haven't been taxed for the Social security and Medicare wages listed in boxes 3 and 5 of the W2, and don't need to pay taxes on that amount either. However, when you put $1 in box 1 and indicate rest of the Social security / Medicare wages as difficulty of care payment received from IHHS, the taxable income for CA on the return form gets adjusted by the amount in box 3 and 5 (Social security / Medicare wages). For example, if the amount in box 3 and 5 is $10,000, the taxable income on the CA tax return form gets decreased by $10,000. This ends up in a bigger tax refund for the CA portion. This doesn't seem right since you're reporting $1 income and getting $10,000 deducted from the total income. I have a W2 from a different job as well and the $10,000 gets deducted from my adjusted gross income for CA taxes when I follow what is being recommended. If I put $10,000 in box 1, then indicate $10,000 as difficulty of care payment received from IHHS , that adjustment doesn't happen. I feel like putting $0 or $1 in box 1 with the $10,000 for difficulty of care payment received from IHHS is going to cause issues. What's the correct way to do this? Am I missing something? The reason I want to include the W2 with 0 in box 1 is to get a refund of the excess social security taxes I have paid.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

waver123 — Fri, 01 Mar 2024 03:19:40 GMT

yeah I think you're right.

I almost think we should enter $1 for box1, click button that's all of $1 is difficult of care payments and no other care payments.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

DawnC — Fri, 01 Mar 2024 04:43:20 GMT

You should be answering NO to the question Did you get any difficulty of care payments from XYZ that aren't in box 1? (This includes payments in other boxes or that aren't on your W-2.) If you received a normal W-2 with your earnings in Box 1, enter it as is and answer the follow-up questions after. If the full amount is for Medicaid Waiver Payments, answer Yes to the first question and No to the second question.

If you received a W-2 with $0 in Box 1, follow the instructions below:

Sign in to TurboTax and open your return.
Select Search, enter w-2, and select Jump to w-2.
Enter all your W-2 info as shown on your form, except Box 1.
Enter the amount reported in box 3 of your W-2 in Box 1.
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.
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 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.

If you received a 1099 or no form, use this link for instructions.

If the w-2 issuing agency is your employer, the payments are subject to social security and Medicare taxes. See Q&A 18 under Agency Questions. @Ag4747

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

fanto3k4 — Fri, 07 Feb 2025 01:24:06 GMT

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.
Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.

There is no box Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.

Re: Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

Vanessa A — Fri, 07 Feb 2025 01:28:43 GMT

If you entered II in box 12 while entering the W2, there will not be a box to check in uncommon situations. If you leave the box 12 blank, that will pop up. This prevents double entry since the box 12 code II now does the same thing.

Do you have anything on the rest of the W2? Do you have other income? Are planning on using this income to claim the Earned Income Tax Credit?