Ihss problem with box 12

[skylertran2018]

when I do turbotax w2 from ihss I realize box 1 is 0, and box 12a II ($38865) equals cell 3 and 5. First I do box 1 is $1, and check "nontaxable Medicaid waiver payment". I did that last year, and the ihss money didn't count on federal tax due. However, now ($38865) federal tax due equal amount box 12a II. Please help.

[CatinaT1]

Ensure you entered it according to these instructions: How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax?

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.     

[skylertran2018]

I still don’t understand, i did the steps, and now on turbotax federal tax due = $38865 and it is equal to the amount of box 12a II. It’s mean that I have to pay it to IRS or not?

[KrisD15]

The W-2 reporting Difficulty of Care has changed for tax year 2024. 

If the W-2 reports zero in Box 1 on the W-2:

If you have the proper code in Box 12, you enter the full amount In Box 1.(not just $1)  (you look at box 3 and enter that in Box 1) 

If the code in Box 12 is correct, the screen for "Let's check for uncommon situations" screen will not have an option to select "Nontaxable Medicaid waver payments that qualify as difficulty of care payments" That option will not be listed.

If the list DOES include that option, select it. 

You must claim all the income or none of the income, whichever is better for your Earned Income Credit.

If your additional income is not needed, do not enter the W-2.

You may see the income listed on your 1040 line 1a, but that same amount will be subtracted on line 8. 

Line 8 comes from schedule 1 so the number might not be exactly the same depending on any other things listed on Schedule 1. 

You can look at Schedule 1 line 8s. 

How to view tax return using TurboTax Online