How do I report excludable income received for a qualified foster individual (per IRS Notice 2014-7) ?

[B-JM]

> How do I fill out Form 1040 to report this income using the Turbo Tax desktop app? 

Details:

In tax year 2023, I received non-taxable (excludable) Certified Family Home (Medicaid waiver) payments from the Idaho Division of Medicaid Department of Health for providing in-home care to my Down Syndrome sister who lives with me in my principle (only) residence. She is the only person under my care. I received a 1099-MISC income form with the amount stated in box 6. 

The payments I receive are excludable as outlined in Notice 2014-7: 

"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, described in this notice, are difficulty of care payments excludable under § 131 of the Internal Revenue Code… Accordingly, an eligible individual receiving care in the individual care provider’s home under a Medicaid waiver program is a “qualified foster individual” under § 131(b)(2). "

 Knowing that these waiver program payments are excludable, and qualifies for the purposes of tax law as a “qualified foster individual", per Notice 2014-7, how do I report this income on my Form 1040 tax return?

[DianeW777]

Yes, you are correct. The Medicaid Waiver payments are allowed to be excluded from your income, but may be eligible for the earned income tax credit (EITC).  Use the instructions in the link below to enter your information.

• How do I exclude my medicaid wavier payments?  Click the type of document you have to see the steps.

[B-JM]

I have had some difficulty finding out how to report this waiver income on my tax return.  However,

after some research and speaking with an H&R Block consultant, I learned that Certified Family Home payments from the Idaho Division of Medicaid Department of Health used for providing home care to my Down Syndrome sister who lives with me in my principle (only) residence qualifies as a Medicaid waiver program. Hence, these waiver payments are excludable income under Notice 2014-7:  "... an eligible individual receiving care in the individual care provider’s home under a Medicaid waiver program is a “qualified foster individual” under § 131(b)(2). ".  For the purposes of tax law, IRS Notice 2014-7 defines individuals in these circumstances as "qualified foster individuals".  As a result, this income is to be reported on Form 1040 Schedule 1. Since these waiver payments are classified as excludable income, you DO NOT report it as 1099-MISC income because that will classify it as taxable, and in Turbo Tax it requires all that complicated business information which in my situation does not exist!  Hence, because you will report these Medicaid waiver payments on Schedule 1, you DO NOT report it as 1099-MISC.  It is either one, or the other, but never both.  Turns out H&R Block online Deluxe has this awesome feature that you can select: "I want to exclude Medicaid waiver payments under Notice 2014-7 ", and there you simply type in the amount found on the 1099-MISC document.  Too bad Turbo Tax does not have a simple, direct way to report this income type.