How to enter IHSS live-in provider W2 with Zero in Box 1?

[jackkgan]

Hi there, I have been a IHSS live-inprovider since the past few years. Hence wages box 1 and box 2 are zero, though boxes 3, 4, 5 and 6 have values.  Turbotax would not let me e-file if box 1 is zero, hence I have been excluding IHSS W2 in my previous returns. I received the following email this year. Please advise if I should continue excluding IHSS W2 or include it and Turbotax would allow me to e-file even if box 1 is zero, or how to go about . Thank you

January 13, 2025

You are receiving this notice because you are a IHSS and/or WPCS provider, who has an In-Home Supportive Services (IHSS) Program And Waiver Personal Care Services (WPCS) Program Live-In Self-Certification Form For Federal And State Tax Wage Exclusion (SOC 2298) on file. Due to a change in the Internal Revenue Service (IRS) regulations, providers who have submitted an SOC 2298, will begin receiving W-2 forms each year starting with the 2024 Tax Year. In accordance with revised IRS regulations, federal, state, and local non-taxable income will appear on your W-2 form in Box 12-II.

[CatinaT1]

Yes, you can enter this and still e-file. 

TurboTax can exempt income under Notice 2014-7 per the IRS instructions for Medicaid Waiver payments from IHHS. 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. Additionally, you can choose to use this income to calculate Earned Income Credit. Regardless, the income will remain non-taxable.     

If you received a W-2 with $0 in Box 1:  

1. Sign in to TurboTax Online, click Continue to your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);     
2. Click on Federal Taxes, and then click on Wages & Income;     
3. Under Wages and Income, click Start;      
4. Click on Work on my W-2, and enter the information as reported on your W-2.     
5. After entering all your W-2s, you will see the screen, Let’s check for uncommon situations. Next to Nontaxable Medicaid waiver payments, check the box.  
6. You will enter the amount of Medicaid Waiver Payments into the box asking for the total amount of difficulty of care payment you received from IHHS. This will be the same amount reported in Boxes 3 and 5 of your W-2.  
7. When you get to the Earned Income Credit section under the  Deductions and Credits portion of your return, you will be asked if you want to add your Medicaid waiver payment to your income for this credit. You can try it both ways, including it and excluding it from the calculation for the credit and see which way benefits you most.  

If you received a 1099 or no form:  

1. 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);     
2. Click on Federal Taxes, and then click on Wages & Income;     
3. Scroll down to Less Common Income;       
4. Click on Start next to Miscellaneous Income, 1099-A, 1099-C.  
5. Click on Start next to, Other income not already reported on a Form W-2 or Form 1099;      
6. Answer Yes to Did you receive any other wages?;      
7. Leave blank the box for Wages earned as a household employee and click continue;  
8. Leave blank the box for Sick or disability pay and click continue;       
9. Enter the amount of Medicaid waiver payments on Certain nontaxable Medicaid waiver payments not reported on Form W-2, and click Continue.  
10. When you get to the Earned Income Credit section under the  Deductions and Credits portion of your return, you will be asked if you want to add your Medicaid waiver payment to your income for this credit. You can try it both ways, including it and excluding it from the calculation for the credit and see which way benefits you most.  

For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.    

[jackkgan]

Thank you so much! I imported my IHSS W2 in Turbo Tax Premier on my mac. Request your advice for below:

1) All the values got imported except box 12a II which has 38k in my W2. Please advise what to do.. Should I manually choose drop down 12 A in Turbo Tax which says Uncollected Social Security and that 38K manually, should I choose 12A II which says "Medicaid waiver payments excluded from gross income under notice 2014-7?

2) Box 15 seems to be empty in  Turbox after importing the W2 , but it shows CA in my W2. So I added that manually.

3) I don't see "Nontaxable Medicaid waiver payments" under "Let’s check for uncommon situations." . I only see following options.