No. It is neither reportable or taxable.
TurboTax can exempt income under Notice 2014-7 per the IRS instructions. This Notice provides that
certain payments received by an individual care provider under a state Medicaid
Home and Community-Based Services Waiver (Medicaid waiver) program, are
difficulty of care payments and excludable as income.
If these
payments are paid to you in box 1 of form W-2 (they should not), first try to
get a corrected Form W-2 from the payer. If you cannot get a corrected Form
W-2, follow these steps:
Do
not enter the W-2 in the Wages & Salaries topic. Instead enter it as Other Reportable Income under the Miscellaneous Income section. Take the
following steps:
Sign in to TurboTax Online, click Continue your return, then pick up where I left
off (if you are using
TurboTax CD/ Download, then just open your return on your computer);
Click
on Federal Taxes at the top of
the screen;
At
the bottom of Your Income box pick the option in blue to help me add other income, then jump to full list;
Scroll
down the page to the last section titled: Less
common Income and click show
more;
Select start or update next to the last topic
titled Miscellaneous Income, 1099-A, 1099-C;
Scroll
down to the last option titled Other
reportable income and select start
or edit;
When
it asks, "Any other reportable
income?" say yes then
you will make two entries:
Your
first entry description would be W-2 EIN #
(enter EIN number from W-2) Box 1 Medicaid W-2 EIN # (enter EIN number from W-2) Box 1 Medicaid
Next
you click "Add Another Miscellaneous Income
Item," and enter this description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1
amount as a Negative (-) number.
This
both shows and explains removing the W-2 income, placing a zero on Line 21 of
your Form 1040.
If
your W-2 has federal or state taxes
withheld, you can enter these amounts in the Deductions & Credits section
under Other Income Taxes as Withholding
not already entered on W-2.
