Difficulty of Care

[BeckyL1113]

I received a 1099-NEC for caregiver services but this income falls under Difficulty of Care Federal Income Tax Exclusion.  My husband and I are not eligible for the EIC.  Do I fill in 1099-NEC then remove in Miscellaneous Income?  THANK YOU! 

[Vanessa A]

 If your income falls under the Difficulty of Care, as you walk through the steps of entering the 1099-NEC, you will be asked if one of these uncommon situations apply?  Select this income is a Medicaid waiver payment that qualifies as a difficulty of care payment.  TurboTax will automatically enter this as a negative number on line 8s of Schedule 1.  

You do not need to remove it in the Misc Income section as TurboTax is doing it for you when you select that is it a Difficulty of Care Payment.  If you do, you would be under-reporting your income. 

[BeckyL1113]

Under Uncommon Situations there is no option to choose Medicaid waiver payment.

[Vanessa A]

When you enter your 1099-NEC, be sure you are not entering it in the self-employment section.  Instead, you should be entering it under Other Common income>>1099-NEC.   The question is 2 to 3 screens after you enter the 1099-NEC information. 

If you do not see it, go back and delete your 1099-NEC on the summary screen, then re-enter it.  Continue through and select the medicaid waiver payment option. 

[BeckyL1113]

Just realized I was entering as Business Income rather than Other Common Income!  Thank you!  

[BeckyL1113]

THANK YOU!  I just fixed it and what a relief!