How do I handle multiple W-2s from the same employer EIN but other information is different for IHSS home provider

[ysun]

I am a live-in IHSS service provider for my parents and received two W-2s with the same employer EIN, although the employer names are different. Box 1 and 2 have 0.00. Box 3-6 have different amounts. I entered them under the Wages and Income so I can report SS tax withheld for retirement benefit. Upon federal review, I received message: "Remove any duplicate W-2s. We found more than one W-2 with the same information." Could you please help?  Thank you!

[CatinaT1]

Are they both reporting the same income? Why did you receive 2 W2's? 

The entry for IHHS income changed this year. You will enter your W2, even though it shows $0 in box 1. This will also allow you to claim earned income credit.  

If you did not receive a W2, see the instructions further down. 

TurboTax can exempt income under Notice 2014-7 per the IRS instructions. 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. You can choose to use this income to calculate Earned Income Credit. Regardless, the income will remain non-taxable.   

     

This is how you will enter your W2:  

1. Sign into TurboTax Online, click Continue your return, then pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer);   
2. Click on Federal from the menu on the left-hand side and then click on Wages & Income at the top;   
3. Click Edit/Add next to Job (W-2);    
4. click on Add a W-2; and enter the information as reported on your W-2.   
5. After you have entered all your W-2s, you will see a screen that looks like this, asking for uncommon situations. Make sure you check the box for Nontaxable Medicaid waiver payments.    

You will then get to choose whether you want to include the income for Earned Income Credit.   

 For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445 and the IRS FAQs.   

[Critter-3 · Accepted solution]

Since they are both from the same payer you can simply make one entry and combine the info from both forms into one in the program to get around this error message.  This is not a problem for either the feds or the state if you do it that way. 

[ysun]

Thank you for your quick response! One more question: If I combine the two W-2 information in one report, do I put in both my parents' names in Box C- Employer name?  Thank you!

[GeorgeM777 · Accepted solution]

Yes, including both names as employers seems appropriate given that you are combining the W-2 amounts.  Also, when entering your information, keep in mind the advice from @CatinaT1 as the wages you are reporting are likely exempt from federal tax given the nature of the work you performed.  

@ysun 

[ysun]

Thank you very much for your confirmation.  It did removed the error message when I do the review check. 🙂

One more question:  After entering the W2 form (box 1 is 0) under the Wages & Income, and checked the Nontaxable Medicaid waiver payments that qualify as difficulty of care payments for Uncommon Situations (Thanks to the instructions from Tax Expert CatinaT1), do I still need to enter the income as negative number under the Less Common Income - Miscellaneous Income, 1099-A, 1099-C? It gives me a big refund after doing this, but I would like to make sure it is done correctly.

Thank you in advance!

[CatinaT1 · Accepted solution]

No. You do not need to enter the income as a negative number under Less Common Income.

You say you checked the box, but did you also do the last two bullets below?

• After entering all your W-2s, you will see the screen, Let’s check for uncommon situations. Next to Nontaxable Medicaid waiver payments, check the box. 
• You will enter the amount of Medicaid Waiver Payments into the box asking for the amount of difficulty of care payment you received from IHHS. This will be the same amount reported in Boxes 3 and 5 of your W-2. 
• When you get to the Earned Income Credit section under the  Deductions and Credits portion of your return, you will be asked if you want to add your Medicaid waiver payment to your income for this credit. You can try it both ways, including it and excluding it from the calculation for the credit and see which way benefits you most. 

[ysun]

CatinaT1,

Thank you for your further instruction! Yes, I did check the box for Nontaxable Medicaid waiver payments and entered the amount of W2 box of 3 and 5 into the box asking for the amount of difficulty of care payment I received from IHHS.  However, when I get to the Earned Income Credit section under the Deductions and Credits portion, I was not asked if I want to add my Medicaid waiver payment to my income for this credit. It said I don't qualify for this credit. I guess this credit is not for everyone, right?  If that is the case, it's okay.

Now we are back to the issue of unable to e-file with box 1 having 0 amount.  It's still the case for me this year.  Following other people's suggestion, I entered $1 in box 1. This modifies the window for Let's Check your Medicaid waiver payments after checking the box for Nontaxable Medicaid waiver payments.  It has a question "How much of the 1.00 in box 1 is difficulty of care payments?" with three choices: All of it, None of it, and Some of it.  I selected None of it.  I then entered the amount W2 box of 3 and 5 into the box asking for the total amount of difficulty of care payments I received. By doing so, the unable to e-file error is gone, allowing me to continue with e-file process.  Could you please confirm this is a good way to get it around?  Thank you very much!!!

[GeorgeM777]

There is no need to re-enter your Medicaid waiver payments.  Because you had already entered the waiver payments in another section of TurboTax, TurboTax already had the information and calculated that you don't qualify for the Earned Income Credit.  

It's possible you don't qualify for the EIC because your income is too high.  For example, in 2022, if you have 3 or more children who have valid SSNs living with you, the amount on Form 1040 or 1040-SR, line 11, must be less than $53,057 ($59,187 if married filing jointly).  If not, you don't qualify.  If no children who have valid SSNs lived with you, then the amount on Form 1040 or 1040-SR, line 11, must be less than $16,480 ($22,610 if married filing jointly) in order to qualify for the EIC.  

Yes, you were correct to identify that none of the amount in box 1 was a difficulty of care payment.  

@ysun 

[ysun]

GeorgeM777, Thank you for your response.  While waiting for your response, I tried a different way to report the IHSS income that is not shown in Box 1 of W2. Instead of entering them under Wages and Salaries, I put them under the Miscellaneous Income, 1099-A, 1099C, then Other income not already reported on a Form W-2 or Form 1099.  On this page, select Yes for the question "Did you receive any other wages?", hit Continue two times to the page: "Certain nontaxable Medicaid waiver payments not reported on Form W-2 or 1099", Here I entered the combined amount from the two W-2 forms, one for each of my live-in patients for Medicaid waiver payments.  I receive the same CA refund result as faking box 1 with $1.00 which was not suggested by some tax experts.  By doing so, I do not get error message for e-filing.  But I wonder if this could be a problem as I do not have a way to put employer's information on the W-2 form for IHSS income.

Could you please verify if this is the right way to report? and if it is 

Is there a way I can put employer's information to indicate where the money came from?  or it doesn't matter?

Thank you very much in advance!

[GeorgeM777]

Perhaps the better option is to report the Medicaid waiver payments as you did previously.  While the section you reference in your post, Miscellaneous Income, does have a screen directly related to Medicaid waiver payments, it also indicates that the Medicaid waiver payments have not been reported on a W-2.  Your Medicaid waiver payments were reported on a W-2, and that was why you entered the information under Wages and Salaries.  Because the Miscellaneous Income section is dealing with a situation where the Medicaid waiver payments were not reported on a W-2, you probably won't be able to enter the employer information in that section.   

The other issue if you report the Medicaid waiver payments in the Miscellaneous Income section is that the payments will be entered on line 1d of Form 1040 which is where you report these types of payments that have not been reported on a W-2.  Thus, if you report your Medicaid waiver payments through the Miscellaneous Income section of TurboTax, the payments will be entered on the wrong line on Form 1040.  For that reason, perhaps the preferred method is to report the Medicaid waiver payments as you did previously. 

@ysun 

[ysun]

Thank you! Understood your point.  It makes sense.  I hope entering $1 in box 1 to avoid not being able to e-file will not be rejected by IRS.  Do you know for sure it is allowed this year? 

[AmyC · Accepted solution]

$1 will not be a problem. The IRS computer adds up income and allows for rounding so it will slide through.

[ysun]

Thank you very much for your response!  Now I can file with confidence. 🙂