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gaya3bn
New Member

How to enter 1099-NEC received on behalf of nontaxable Medicaid waiver payments under IRS 2014-7

This is done in 2 parts 

Part 1: Enter your caregiver income using the following steps (do not enter the Form 1099-NEC).

  1. Open your TurboTax return > Under Wages and Income scroll to Miscellaneous Income
  2. Select Other income not already reported on a Form W-2 or Form 1099 > Start or Revisit
  3. Select Yes under Did you receive any other wages > Continue
  4. Continue to screen Certain nontaxable Medicaid waiver payments not reported on Form W-2 or 1099 >Enter the amounts you received in Medicaid waiver payments field as a positive number.
  5. This would take into account the income for reporting purpose. 

This will eliminate adding self-employment tax which does not apply.  Keep the 1099-NEC with your tax documents. 

 

Part 2: Follow these steps to remove the income from your tax return.

  1. Scroll down the page to the last section titled: Less common Income and click show more;
  2. Select start or update next to the last topic titled Miscellaneous Income, 1099-A, 1099-C;
  3. Scroll down to the last option titled Other reportable income and select start or edit;
  4. When it asks, "Any other reportable income?" say yes then you will make one entry
  5. Enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a Negative (-) number

When you return to the Wages & Income page, scroll to see the negative income beside Miscellaneous Income, 1099-A, 1099-C; This will remove the income on your return for the IHSS or other payments received by an individual care provider under a state Medicaid Home and Community-Based Services Waiver program.

Thus by doing part 1, your  AGI still continue to report your income to IRS and part 2 eliminates the income you received thus your taxable income does not increase because of this receipt. 

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1 Reply
DianeW777
Expert Alumni

How to enter 1099-NEC received on behalf of nontaxable Medicaid waiver payments under IRS 2014-7

The link below provides detailed instructions for this entry of your Medicaid waiver payments whether on W-2 or Form 1099-NEC.

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