IHSS W2 income on box 1

[techiemom]

I received W2 from IHSS which shows amount on box 1($5,874.00).This is less than $9297on box 3.

This probably happened as the IHSS received the live in certification late(SOC2298).

How do I exclude the income?

This is what I did

1)Kept all the income the ay it is on W2

2)Less common scenerio- seleted

Nontaxable Medicaid waiver payments that qualify as difficulty of care payments

3)Let's check your Medicaid waiver payments

How much of the $5,874 in box 1 is difficulty of care payments?

All of it

4)Did you get any difficulty of care payments from NALIN BHOWMIK that aren't in box 1? (This includes payments in other boxes or that aren't on your W-2.)

Yes

Put $3423 in the box

Please advise

[Vanessa A]

You did it the correct way.  Now none of your IHSS wages should be included as taxable income.  You can verify this by looking at line 1a of your 1040.

On the menu bar on the left that shows. 

1. Select Tax Tools 
2. On the drop-down select Tools 
3. On the pop-up menu 
4. Select View Tax Summary 
5. On the left sidebar, select Preview my 1040 

Or if you are using the desktop version, you will just switch to forms mode. 

[techiemom]

Thanks for replying .However,when I put just the amount from box 3 into box1 and selecting

1)Kept all the income the ay it is on W2

2)Less common scenerio- seleted

Nontaxable Medicaid waiver payments that qualify as difficulty of care payments

3)Let's check your Medicaid waiver payments

How much of the $9297 in box 1 is difficulty of care payments?

Select ALL

The amounts of state tax due becomes different.I am confused why it is so.Shouldn't it be the same as I am doing the same thing in both the cases?

[MonikaK1]

Please clarify. Which state is showing a different amount of tax due after you identify your wages as nontaxable Medicaid waiver payments? Have you already completed the state interview for that state?

[techiemom]

@MonikaK1 

California.Yes,I have already filled up the forms

I am confused if I should put the whole amount from box 3 to box 1 and then exclude the whole amount

Or do I put the amounts in box 1 and exclude it and put the difference of box 3 and box 1 where it asks if there is any other difficulty of care payment not in W2

Turbotax has examples for 0 on box1 of W2 but does not have any example what to do when box 1 has value

Ihss received my soc2298 in Nov and so they sent w2 for the prior months

[MonikaK1]

Thank you for the clarification. Did you end up entering the entire amount from Box 3 in Box 1 in the W-2 section? If you only entered the smaller amount it may show as an error.

If you met all the qualifications to have the IHSS wages excluded from Federal and California income, but just didn't have the Form SOC 2298 on file with the Department of Social Services until November, then you can still exclude all of the income.

If you saw a change in the refund meter for California when you entered the W-2, finish your Federal return and then go through all of the California interview and answer the questions. The IHSS income is excludable from California income as well.

[kamhaik]

Hi Monika. 

My wife got an IHSS W2 for being our disabled daughter's caretaker at home (24/7 care essentially). Her box1 is over 30k. but she should be exempt because our daughter lives with us. however when entering the w2 into turbotax it taxes us heavily and now i'm owing a lot of money. I believe she filled out the SOC 2298 form earlier in the year (2024) so this is strange. My daughter's address weirdly is showing the IHSS POBOX address here in California. Should it be showing our home address? I'm wondering if CA IHSS made a mistake on our W2.

[AmyC]

You choose whether to include the income for credits or exclude the income. It sounds like you chose to include. To change your option: 

1. return to the w2 entry and edit.
2. go through the entries and continue
3. select this is nontaxable difficulty of care payment

@kamhaik 

[kamhaik]

thank you so much, Amy! It turned out that somehow my wife's SOC 2298 did not get into the system (although we have certified that our daughter lives with us on every one of her timesheets). So we should be okay if IRS does inquire right?

[AmyC]

Yes, you have a paper trail and allowed exemptions on the income.