1) Should I report the IHSS W2?
You can enter the IHSS W-2 although technically a W-2 is not supposed to be used to report in-home IHSS payments.
Those payments are not taxable.
The only thing that IHSS W-2 is reporting is the non-taxable payments subject to FICA (Social Security Tax) and it reports the FICA that was deposited into your Social Security Account. The IRS does not need to know this.
TurboTax should recognize this W-2 as an IHSS W-2 and not show an error, but if it does, you have the option of NOT entering the W-2.
If you don't enter the IHSS W-2, the IRS won't be concerned since their copy will show them who issued it and that it isn't taxable income.
2) Should I enter the taxes withheld? I assume I may get some credit for that.
Again, those taxes are Social Security deposits made to your Social Security account. You DO NOT get any federal INCOME TAX credit for those deposits.
3) Also , I don't find box D control number in my W2. What should I enter for that?
You can leave that box blank. Control number is used by your payroll department, it is not used for tax purposes.
Additionally, please be aware that if the amount of your IHSS payments would increase your Earned Income Credit, you have the option of adding that amount as income.
The rule to this is that if the TOTAL amount you received increases the credit you can add the ENTIRE TOTAL to your other income. You CANNOT only add some. So it's add it all or none.
If adding this additional income WOULD increase your Earned Income Credit, I suggest you use the following steps to enter it.
Link for EIC Table (scroll down to EIC Table to see if the additional income would benefit you, other requirements also need to be met for the credit))
Click Add more income
Scroll down to the VERY LAST option "Less Common Income" and click Show more
On this new drop-down list scroll down to the VERY LAST option "Miscellaneous Income" and click START
On this new drop-down list scroll to the VERY FIRST option "Other income not already reported on a Form W-2 or Form 1099"
Click START
Select YES to the page titled "Other Wages Received" and Continue
Select CONTINUE on the "Wages earned as a Household Employee" screen (enter nothing here)
Select CONTINUE on the "Sick or Disability Pay" screen (enter nothing here)
Select "Yes" on the "Any Other Earned Income" screen and continue
Select "Other" on the "Enter Source of Other Earned Income" and Continue
In Description Box type "Qualified Medicaid Waiver Pay" and the amount
(NOTE- YOU MUST ENTER ALL THE INCOME OR NONE)
Click Done
This will put the income on your 1040 line 1 where it needs to be.
Now you need to make an entry so that TurboTax will make the income exempt from tax.
(NOTE- AT THIS POINT, YOU MAY NOT OWE ANY TAX ON THE INCOME AND YOU MAY ALREADY HAVE THE EIC CREDIT INCLUDED IN YOUR REFUND, THEREFORE THE NEXT STEPS MAY OR MAY NOT CHANGE THE FEDERAL REFUND METER ON TOP OF THE TURBOTAX SCREEN)
Go back to the Wages & Income section
(you will be repeating some steps, but not all)
Scroll down to the VERY LAST option "Less Common Income" and click Show more
On this new drop-down list scroll down to the VERY LAST option "Miscellaneous Income" and click REVISIT
Now scroll down to the VERY LAST option "Other reportable income" and click Start
Select YES on the "Any Other Taxable Income?" screen
Type "Tax Exempt Income on line 1" and the same amount you entered before but as a NEGATIVE (put - in front of the number)
This NEGATIVE number should show on your 1040 line 8
TO CHECK IN TURBOTAX ONLINE:
Click "Tax Tools" on the LEFT SIDE BAR then click "Tools" that open below
Click "View Tax Summary" on the screen
Click "Preview my 1040" which now appears on the LEFT SIDE BAR
Scroll through the 1040.
The amount of income should be on line 1
The adjustment (negative) should be on line 8
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