Medicaid waver payment did not result to return of income tax withheld

[Joy138]

After I had put in the w2 information in Turbo Tax and clicked on “Nontaxable Medicaid waiver payments that qualify as difficulty of care payments” and checked “All of It”, I was expecting my estimated refund to increase by the amount of the withheld federal tax but instead,  Turbo Tax decreased it.  Why would that be?

[KrisD15]

The decrease in refund could be based on a lower Earned Income Credit, or adjusted some other credit on your return, 

HOWEVER

if there were federal tax withheld on the W-2, that might indicate that the payments were something other than Difficulty of Care payments, or only PART of the income is Difficulty of Care payments.

A W-2 reporting only Difficulty of Care payments should have NO federal tax withheld. 

HERE is a TurboTax link

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