california state refund updated to zero after adding w2 with 12 a II medicad waiver payments

[smuddaiah]

Would like to know once the medicad waiver payments were added on the federal taxes, the california state tax refund ended to 0 before adding the medicad payments there was a state refund showing.

Please explain

[MonikaK1]

It depends on what entries you have on your W-2 and whether the refund was from Earned Income Credit. Your In-Home Supportive Services (IHSS) income may be exempt for both your California and your Federal returns if you received income from a Medicaid waiver or IHSS program for providing care to an individual you lived with.

The code "ii" in Box 12 of the W-2 is new this year. How you enter your IHSS information in TurboTax depends on whether all of the income qualifies as nontaxable Medicaid Waiver payments, and which fields on Form W-2 were completed on your return. We have found that if you enter the Box 12 information, that the follow up screen doesn't display the choice to designate the income as Medicaid Waiver Payments.

If you have zero in Box 1 wages on your W-2, but you need to designate the wages as qualifying you for the Earned Income Credit, you can opt instead to report the actual amount you received as Miscellaneous Income.

If your income was exempt, you didn't have any taxes taken out, and didn't receive a Form W-2, you don't have to report the income on your returns.

If you wanted to use the income to qualify for Earned Income Credit:

1. Sign in to TurboTax and open your return.
2. Select Federal, then Wages & Income.
3. Under Less Common Income, select Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C.
4. Select Start or Revisit next to Other income not already reported on a Form W-2 or Form1099.
5. Answer Yes to Did you receive any other wages?  and Continue.
6. Continue through the screens, leaving the boxes blank until you get to the Certain nontaxable Medicaid waiver payments not reported on Form W-2 or 1099 screen.
7. Enter the amount of Medicaid waiver payments and Continue.
8. Finish entering the rest of your income.
9. 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.

See this TurboTax help article under "I received a 1099 or no form" for more information.

We are currently considering revisions to the help article.