Code 2014-7 I shouldn’t pay federal taxes I didn’t know when I filed taxes (2025) I owed $5000 but am now owed $3434 in overpayment.Am I obligated to still pay the $5000?

[yahyahxbel20]

The reason I owe the $5000 is because of the W-2 from the employer that should be excluded from taxable income therefore shouldnt that offset the amount owed and I be refunded the amount that I overpaid?

[Opus 17]

If you filed a return showing that you owed $5000, you owe the $5000.

If you believe the return you filed was incorrect, you fix that by filing an amended return.   On the amended return you indicate that the W-2 is for difficulty of care payments.  Here are some articles on how to do that.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-w-2/qualified-medicaid-waiver-payme...

https://ttlc.intuit.com/community/taxes/discussion/difficulty-of-care-payments/00/3126610

The amended return will calculate your new tax amount.  If the new tax amount is less than the amount you already paid (considering withholding and all other payments) you will be claiming a refund when you file the amended return.   Here are instructions on how to file an amended return.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-return/amend-federal-tax-return-curr...

[yahyahxbel20]

I’m unsure if I was as clear as I should have been but the $5000 owed was based on the second w-2 which is the one that was tax exempt so, would I still owe in money in tax exempt for?

[Opus 17]

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@yahyahxbel20 wrote:

I’m unsure if I was as clear as I should have been but the $5000 owed was based on the second w-2 which is the one that was tax exempt so, would I still owe in money in tax exempt for?

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Your question is really unclear.  

First, let me mention that you only file one tax return for the whole year that lists all your combined income.  You don't file separate returns for each W-2.  

Then, if you are preparing your tax return, and you see your refund change drastically after adding a second W-2, that is often normal, and a result of having too little tax withheld from the second job.  The W-4 that you file with your employer to set up your withholding is designed for people with one job, and if you have more than one job, or you are married and your spouse works, you have to make adjustments using the worksheets on pages 2-4 of the W-4 form.  (This would not apply if your second job was non-taxable difficulty-of-care payments, assuming you entered them correctly.)

So I am not clear on your situation and what you actually did.  How did you prepare your first tax return that showed you owed tax of $5000?  Why do you now think you are due a refund of $3434?  What did you do and what did you change? 

I'm also not understanding whether you think you paid $5000 and are now owed a refund of $3434 (meaning your tax should have been $1600), or you think you are now owed a refund of $8434 (the $5000 plus the extra).  More information is needed to help understand your situation. 

[yahyahxbel20]

So I was told I was tax exempt according to cod 2014-7 so when I filed I filed without that w-2. After talking to someone they said I still had to file the w-2 so I refilled it amended the return then it stated I owed $5000. I then after speaking with an irs rep who told me I need to reamend to correctly input my w-2 because my income should have gone in box 12 not 1. After correcting it it says I was due a refund of 3434 because I overpaid. Would I still owe the $5000 if the first amendment was wrong?

[Opus 17]

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@yahyahxbel20 wrote:

So I was told I was tax exempt according to cod 2014-7 so when I filed I filed without that w-2. After talking to someone they said I still had to file the w-2 so I refilled it amended the return then it stated I owed $5000. I then after speaking with an irs rep who told me I need to reamend to correctly input my w-2 because my income should have gone in box 12 not 1. After correcting it it says I was due a refund of 3434 because I overpaid. Would I still owe the $5000 if the first amendment was wrong?

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What you should have done in the first place is listed the exempt W-2 but checked the box in the program for "difficulty of care" payments.

There may also be an issue with your W-2, and the IRS person was likely wrong.  The payer could have reported the wages in box 12 with code II (eye-eye, not ell-ell) instead of box 1.  But if the wages were reported in box 1, you have to file the tax return that way, and make an adjustment on Schedule 1 line 8s.  If you put down in your tax return, something different than on your W-2, you may get a letter asking for an explanation.  

So I don't even know if your second amended return is correct.

It sounds like you filed a tax return, then a first amended return showing you owed $5000, then a second amended return showing a refund of $3434.  You need to look at the form 1040-X lines 12-22. 

• Does the first 1040-X show you owe $5000 on line 20?  If so, did you actually pay it?
• Does the second 1040-X show the $5000 on line 16?  Does it show a refund on line 21-22?

Basically, it sounds like, IF you paid the $5000, you should be getting back $3434.  But if you did not pay the $5000, you still owe $1566.  

[yahyahxbel20]

So I did what the IRS told me they said for tax code 2014-7 I put my income in line 12 instead of 1 and use the code ll in the box when filing because it isn’t counted towards my gross income. lol but whatever the case may be the 22 line says 0. So with that being said all I am asking is will I get the 3434? 🤣

[yahyahxbel20]

Also line 16 is zeros out as well.

[yahyahxbel20]

All there is $3434 in 18 everything else has 0’s or nothing at all

[Opus 17]

Sorry, I still don't have a clear picture.  If $3434 is the overpayment on line 18 of the most recent (second) amended return, that is a carry over from your first amended return.  Everything else being zeros means there is no change with the second amended return.   So you would have to look at the first amended return, and what it said about a refund.  You may need to take all your forms to a tax professional, or see if you can upgrade to the Live Assisted version of Turbotax so a pro could walk you through what you did, or try calling customer support and see if they will walk you through your forms without paying for an upgrade.  

[yahyahxbel20]

I already did that and that is how I got the results that I got. I spoke with the IRS and the they stated that they will go with the second amended return given its accuracy. I have explained to them the same thing I have explained to you and they said that I would not owe the $5000 because, I was tax exempt from the beginning meaning the $5000 was never owed because the w-2 that was filed separately was tax exempt… In better word the $5000 was because the irs over paid me due to my gross income increasing. But code 2014-7 says that the income is not supposed to count toward my gross income meaning the gross income for the original filing was the accurate amount I just needed to adjust how I input the second w-2 because I put it in as a regular w-2 when it should have been put in as a difficulty of care w-2 which takes away the gross income for that. In short… the $5000 isn’t owed and I am due a refund for the amount that I paid in federal taxes seeing as I should have never being paying federal taxes from the beginning. 

[Opus 17]

If the tax amount from your first return was correct (even though some items were not listed), then that should be where you are at the end.  Did your first return claim a refund?  Was it paid?  Then you are probably done.  But I can't really be sure about that without seeing the various forms and their history.  

[yahyahxbel20]

It is pretty much the same except because my job wasn’t putting that I was tax exempt I paid $3434 in federal taxes when I should not have been so the only thing that is different from the first return is that I am getting what I paid in federal taxes back because again.. I was paying taxes on money that I was exempt from.