Can't E-file with W2 having $0 in Box 1- IHSS provider with exempt income

[fanto3k4]

It's new this year.  IHHS sent my wife an email stating they were going to start reporting W2 now because of IRS rule change.  We never got them in the last.  She also takes care of our child.  My return was accepted.  Once the refund hits my account I will try to remember to report back.

[Vanessa A]

Some people use this income to claim the Earned Income Tax Credit or the Additional Child Tax Credit. If you have no other income, and do not want to claim either credit, then you do not need to file a return.  

If you have other income, and you report it using less common income, the income is then backed out of your return so it results in $0 net change but it still reports the W-2.

Follow these steps which will allow you to use the IHSS payments to report the W-2 income, but also if eligible claim the EITC and ACTC, and have it backed out of your return as soon as you report it.

1. Select income
2. Miscellaneous Income which is under Less Common Income
3. Other Income Not already reported on a Form W-2 or Form 1099
4. Select Yes to did you receive any other wages
5. Continue to the box that asks for your Medicaid Waiver payments
6. You will be asked about using this income for the Earned Income Credit
7. After you do this, you will need to visit the credits and deduction section to answer the Earned Income Credit questions.
8. Continue through to file your return

This will allow you to e-file as well.

@GjJ3 

[fanto3k4]

Happy to report back that I got my Fed Refund!  So hopefully the directions I followed were correct.

[GjJ3]

Thank you!!!!

[houckman]

fanto3k4, so, my situation is the same as yours.  Did you put $1 in box 1 or the full amount ($18k as listed in Box 12)?

[houckman]

@fanto3k4 , so, my situation is the same as yours.  Did you put $1 in box 1 or the full amount ($18k as listed in Box 12)?

*reposted as I did not tag user correctly.

[ThomasM125]

Since you don't have taxable income in box 1, you don't need to enter the W-2 form in TurboTax unless you have tax withheld reported in boxes 2, 17 or 19.

If you want the income to be considered for earned income credit purposes, you can enter it as follows:

1. Navigate to Less Common Income in the Wages and Income section of TurboTax

2. Choose Miscellaneous Income, 1099-A, 1099-C

3. Choose Other Income not already reported on a Form W-2 or Form 1099

4. As "yes" on the screen that says Other Wages Received

5. On the screen that says Certain nontaxable Medicaid waiver payments not reported on Form W-2 or 1099 enter your Medicaid waiver payments 

@houckman 

[fanto3k4]

I put zeros everywhere, put II in box 12a and left box 12 blank.  This gives you the screen to enter in the amount by checking medical waiver box.

"If you entered II in box 12 while entering the W2, there will not be a box to check in uncommon situations.  If you leave the box 12 blank, that will pop up.  This prevents double entry since the box 12 code II now does the same thing."

[houckman]

@ThomasM125  - thanks.  Maybe since you are an employee, I can screen capture the comment to help during the audit.  😀

Thank you for the input!

[fanto3k4]

IRS Agent neighbor told me if I did not enter the IHHS W2..... "AUR matches all informational returns and they’ll send you an audit letter and it will be a vicious cycle."  Had to look up AUR.  She also told me...  "If nothing else and we find that it’s not taxable, I will walk you thru adding and backing it out on Schedule 1. Not complicated just another form TT will likely charge you for but at least you can file electronically."

https://www.wiztax.com/blog/irs-aur/

[CatinaT1]

I don't see that anyone has referenced this help article, so just adding it to the convo.

How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax?

[fanto3k4]

Thank you.  A bunch of confusion because IHHS just started giving out W2 to family caregivers due to IRS rule change even though the income is not taxed.

[houckman]

It appears, for what it is worth, that this issue has been resolved by the latest update.  I downloaded it this morning, reentered my W2 exactly as I received it, and I no longer get the "can't eFile" message.  I haven't filed yet... but this is promising.  

[next_milenium]

I can also confirm TT now allows e-filing even if you enter a W2 with 0 amount.

[rfclub]

My e-file got rejected by IRS due to this IHSS w-2 with $0 in box 1.

I am claiming Excess Social Security Tax. 

But seems like turbotax is not sending the IHSS w-2 to IRS,

so the Social Security Tax information is missing.