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Mssnina
New Member

IHSS Exempt Care Provider

Hello, I am an EXEMPT Live-in IHSS Care Provider and I am having the hardest time finding an exact answer that  I need. I’ve used Turbo tax for many of years and never have I felt so stumped in my life. My entire W-2 is filled with zeros! With an exception  of box 12A stating my wages for the year. In my previous years at other employers I never was exempt and never faced this issue. For the year of 2024 my ONLY income is IHSS and I would like to report my income for a tax credit as I have 4 dependents. ( I only keep

seeing advice for those who have additional w-2’s which is not my case) PLEASE HELP! 🙂 

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11 Replies

IHSS Exempt Care Provider

Mssnina
New Member

IHSS Exempt Care Provider

Hello, 

 

Thanks you for Sharing that link with me. However I’m stumped still or just missing something. It states to enter amounts from box 3 and 5. Those amounts are zero so leaves me at a stand still :(

IHSS Exempt Care Provider

If the code in box 12 is II then complete the entry of the W-2 with the information provided on the W-2 received.  The amount shown in box 12 will not be entered on your tax return as income.

tlund1232
New Member

IHSS Exempt Care Provider

I am going through the exact same thing. I have always filed with turbo tax with no problems. This change has left me feeling hopeless... I see that even though the income is tax exempt, we can choose to include it for the credit purposes. The problem is figuring out how to input it. Where do we include this info? And after I just continue going through the online process, Turbo tax stated that the code II in box 12 disallows us to e-file and requires me to send it by mail. This is unfair to all ihss live in providers with dependents. And all answers have not been helpful, as they refer to other situations. If you figure this out, please let us know how to do it here. I will do the same. Good luck!

IHSS Exempt Care Provider

Trying to figure this out as well.  It seems that all of the replies and other posts I have read are not understanding all of the details here and why this is an issue with TT 2024:

 

- These payments were previously not reported on a W2, there is a change for this year where a W2 is now issued with zeroes in ALL boxes EXCEPT for box 12 where it shows the payments with a new code "II" which indicates they are Medicaid Waiver Payments.

- When entering this W2 info in TT 2024, it correctly puts the amount on 1040 Line 1d (Medicaid waiver payments) and then subtracts it on line 8 (Other income) so the amount is not included in AGI on line 11.  So far so good.

 

The problem then comes when trying to eFile from TT, it says it cannot eFile because one of the W2's has a zero amount in box 1 and says the return must be mailed.

 

Is TT aware of this issue and is there some type of update that can be done to fix this issue for those of us with this situation?  I saw some posts that says to put $1 in box 1 of the W2 as a workaround but this doesn't seem like a good solution since it won't match what the actual W2 says and could flag the return for review.

Vanessa A
Employee Tax Expert

IHSS Exempt Care Provider

Here is a workaround to the $0 in box 1 for IHSS payments. You can do this instead of entering $1.

 

  1. Open or continue your return.
  2. Navigate to the W-2 section:
    • TurboTax Online/Mobile: Go to W-2.
    • TurboTax Desktop: Search for w-2 and select the Jump to link.
  3. Enter all your W-2 info as shown on your form, except Box 1.
  4. If you have a number instead of zero in Box 3, enter that number again in Box 1.  If you ONLY have a number in box 12, you can enter it in box 1 as well.
  5. On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.  (If you enter the number in box 12 with code II, you will not see this option, entering it in box 12 will be enough)
  6. Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.
    • This is the same amount reported in boxes 3 and 5 of your W-2.
    • Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.
  7. When you get to the Earned Income Credit section in Deductions & 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.

NOTE: When you enter the income as IHSS payments TurboTax will automatically back out your IHSS payments on line 8 of your 1040.   You will see this shown as a negative number so this will NOT be included in your taxable income, however, if you choose it will still be included in your EITC calculations. 

 

@RobbyG2112 (Edited 2/5/2025 @ 5:19PM PST)

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tlund1232
New Member

IHSS Exempt Care Provider

Please come back in a month and let us know if that $1 in the boxes idea works. I'm sure we are all curious as to how that plays out.

CatinaT1
Employee Tax Expert

IHSS Exempt Care Provider

For future reference:

 

Here is how you enter this W2 in TurboTax: How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax?

 

[edited 2.5.25 | 12:20pm pst]

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IHSS Exempt Care Provider

Hi, thank you for the reply.  In my case we are not trying to claim the amount for EIC and I am only entering it in TT since I didn't want to skip entering the W2 since it was issued this year.  In the past we didn't receive a W2 for the Medicaid Waiver Payments so this is the first time running into this issue.

 

If I put $1 in box 1 of the W2 there is nowhere to put a description like there is for Other Income as you suggested so I am not sure if this would cause a problem or not.

 

Is there any way that TT can issue a program update for this specific issue that would allow us to eFile normally?

 

IHSS Exempt Care Provider

Thank you @Vanessa A for the reply on this.  In my case box 3 has 0 (all boxes except for box 12 have 0) so if I enter the amount from box 12 to line 1 this will certainly get around the eFile issue, but how do I know that this won't flag my return since the amount will not match the actual W2?  And is this actually better than entering $1 instead since in both cases the amount will not match?

 

The only other option is to not enter the W2 at all (we don't qualify for EIC anyway).  I am not sure which of the 3 options is the correct way to handle this and not flag my return.

 

Editing my reply above since I tried this and it doesn't work correctly.  By entering the amount from box 12 to box 1 it ends up adding this amount on Line 1a and also line 1d (from the Box 12 code II) so it counts the amount twice.  So even though it gets subtracted on Line 8, my Total Income is increased.

 

I see the new reply from @KrisD15 indicating that I can exclude the W2 since I don't claim EIC and the IRS won't care.  It would be nice to get a consensus from the different Tax Experts in this thread if this is the best way to handle this. 

 

I also just realized that my situation is different than the other posters in this thread who do want to claim EIC so for those people they might still be stuck.

KrisD15
Employee Tax Expert

IHSS Exempt Care Provider

The ONLY reason IHSS Caregivers are getting Form W-2 is in case they wish to use the income for certain credits. 

The choice to enter the W-2 is up to the Taxpayer. 

The IRS knows what type of W-2 it is and certainly won't care if it isn't reported. 

 

According to the IRS:

"Other types of earned income. Other types of earned income not reported on Form W-2,..."

"...certain Medicaid waiver payments if you choose to include nontaxable payments in earned income for purposes of claiming the EIC, taxable dependent care benefits,"

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