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bytecodeperry22
New Member

My income is considered "Difficulty of Care Income" and is nontaxable yet i am considered to be self employed. How would i report the income and claim deductions?

 
1 Best answer

Accepted Solutions
macuser_22
Level 15

My income is considered "Difficulty of Care Income" and is nontaxable yet i am considered to be self employed. How would i report the income and claim deductions?

Per the IRS 1040 schedule I instructions

 

quote

Medicaid waiver payments to care
provider. Certain Medicaid waiver
payments you received for caring for
someone living in your home with you
may be nontaxable. If these payments
were reported to you in box 1 of Form(s)
W-2, include the amount on Form 1040
or 1040-SR, line 1. Also, include on
line 1 any Medicaid waiver payments
you received that you choose to include
in earned income for purposes of claiming
a credit or other tax benefit, even if
you did not receive a Form W-2 reporting
these payments. On line 8, subtract
the nontaxable amount of the payments
from any income on line 8 and enter the
result. If the result is less than zero, enter
it in parentheses. Enter “Notice
2014-7” and the nontaxable amount on
the dotted line next to line 8. For more
information about these payments, see
Pub. 525.

 

 That is reported on the 1040 schedule 1 line 8 as follows:


Federal Taxes,
Wages and Income,
Choose Jump to Full List -or I'll choose what I work on
Scroll way down to the end - Less Common Income
Click start or update next to the last one "miscellaneous income"
Then the last one for Other Reportable Income
For description enter “Notice 2014-7” . Enter the amount with a minus sign (-) in front of it.

 

The Schedule 1 line 9 will go on the 1040 line 7a.

Screen Shot 2020-07-01 at 1.44.19 PM.jpgScreen Shot 2020-07-01 at 1.44.35 PM.jpg

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

2 Replies
SusanY1
Expert Alumni

My income is considered "Difficulty of Care Income" and is nontaxable yet i am considered to be self employed. How would i report the income and claim deductions?

You cannot include Difficulty of Care Income on your tax return, as it is excluded from income taxation and is not reported on your tax return at all. 

 

If you have other self-employment income to report you will enter this, along with the corresponding expenses, under self-employment income and expenses in Wages & Income (or Income & Expenses in some versions of the program.)  

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macuser_22
Level 15

My income is considered "Difficulty of Care Income" and is nontaxable yet i am considered to be self employed. How would i report the income and claim deductions?

Per the IRS 1040 schedule I instructions

 

quote

Medicaid waiver payments to care
provider. Certain Medicaid waiver
payments you received for caring for
someone living in your home with you
may be nontaxable. If these payments
were reported to you in box 1 of Form(s)
W-2, include the amount on Form 1040
or 1040-SR, line 1. Also, include on
line 1 any Medicaid waiver payments
you received that you choose to include
in earned income for purposes of claiming
a credit or other tax benefit, even if
you did not receive a Form W-2 reporting
these payments. On line 8, subtract
the nontaxable amount of the payments
from any income on line 8 and enter the
result. If the result is less than zero, enter
it in parentheses. Enter “Notice
2014-7” and the nontaxable amount on
the dotted line next to line 8. For more
information about these payments, see
Pub. 525.

 

 That is reported on the 1040 schedule 1 line 8 as follows:


Federal Taxes,
Wages and Income,
Choose Jump to Full List -or I'll choose what I work on
Scroll way down to the end - Less Common Income
Click start or update next to the last one "miscellaneous income"
Then the last one for Other Reportable Income
For description enter “Notice 2014-7” . Enter the amount with a minus sign (-) in front of it.

 

The Schedule 1 line 9 will go on the 1040 line 7a.

Screen Shot 2020-07-01 at 1.44.19 PM.jpgScreen Shot 2020-07-01 at 1.44.35 PM.jpg

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

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