I take care of my father under the state Home and community-based services waiver program, and received 1099NEC income, how to file on my tax form

[davidruan7]

 I got the 1099NEC from homecare service for taking care of my father, and according to this link Certain Medicaid Waiver Payments May Be Excludable From Income | Internal Revenue Service (irs.gov) , on QandA 13, my situation fit perfectly, however, how can I do it as it said in turbotax software? Do I need to report the 1099NEC in this case?

Q13. I provide services under a state Medicaid Home and Community-Based Services waiver program. The agency that pays me for these services does not treat me as an employee, and I do not have a separate trade or business of providing these services. However, the agency reported the payments as income on Form 1099-MISC, Miscellaneous Income. How should I report to the Service that these payments are excludable from gross income?

A13. You should enter -0- on line 21 of Form 1040 if you have no other income reportable on line 21. If you have other income reportable on line 21, you should enter the amount of the other reportable income on line 21. You should write “Notice 2014-7” on the dotted line for line 21 on a paper return or enter “Notice 2014-7” on line 21 for an electronically filed return. Because the payments are excludable from income, and because you do not have a trade or business of providing these services, the payments are not self-employment income subject to self-employment tax.

[CatinaT1]

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. 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.  

  

Since you received a 1099-NEC, you should enter the information in TurboTax and then show an offset for this entry so that you will not be taxed on the payments. This will reconcile your tax return with what the IRS has received and then show the corresponding offset to explain why it is not taxable. 

  

1. Sign into 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 from the menu on the left-hand side and then click on Wages & Income at the top;  

   1. 1. Scroll down to "Less Common Income";  

      2. click on Show More; 

      3. click on Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C; 

      4. click on Start or Revisit next to Other reportable income; 

      5. select Yes 

      6. enter "In-Home Support Services Payments, EIN # (enter EIN number from 1099)" in the description box and then enter the amount from your 1099; 

      7. click Continue.  

3. To enter the offset for the payments :  

   1. Click on Wages and Income at the top of the screen; 

   2. scroll down to "Less Common Income"; 

   3. click on Show More; 

   4. click on Start or Revisit next to Miscellaneous Income; 

   5. click on Start or Revisit next to Other Reportable Income; 

   6. select "Yes" or "Add Another Income Item"; 

   7. in the "Description" section, enter "IRS Notice 2014-7 excludable income" and in the "Amount" section, enter the 1099 amount as a negative (-) number. 

  

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