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Taxable difficulty of care payment

If there is a portion of difficulty of care payment that is taxable, and no form is provided,  where do you put the taxable amount on the tax return?

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3 Replies
SharonD007
Employee Tax Expert

Taxable difficulty of care payment

Follow the instructions below for taxable difficulty of care payments that you did not receive a tax form for:

 

Select Wages and Income from Tax Home.

  1. Under Less Common Income, select Start or Revisit next to Miscellaneous Income, 1099-A, 1099-C.
  2. Select Start or Revisit next to Other income not already reported on a Form W-2 or Form 1099.
  3. Select Nontaxable Medicaid waiver payments not reported on a W-2 or 1099 on the screen Types of wages you received. 
  4. Continue to the Certain nontaxable Medicaid waiver payments not reported on Form W-2 or 1099 screen.
  5. Enter the amount of Medicaid waiver payments received. If the 1099 shows zero, enter the actual amount received.
  6. Finish entering the rest of your income.
  7. When you get to the Earned Income Credit section in Deductions & Credits, we’ll ask if you want to add your Medicaid waiver payment to your income for this credit. You can answer based on what benefits you most. However, you may need to include difficulty-of-care or Medicaid waiver payments as income on your state return. For example, Pennsylvania requires this even though the payments aren't taxed by the federal government.

Refer to the TurboTax article: How do I enter my tax-exempt Medicaid waiver payments from IHSS in TurboTax? For navigation instructions.
 

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Taxable difficulty of care payment

I need to know where the taxable portion of the difficulty of care income goes if there is no w2 or 1099?

AmyC
Employee Tax Expert

Taxable difficulty of care payment

Taxable and difficulty of care don't usually go together although having it count as income in order to claim credit is important. I am gong to assume you are looking for income for credit rather than taxable.  Two step process:

1. Enter the income as described above by @SharonD007 

2. Go to federal deductions and credits. Locate Earned Income Credit. You need to go through and the program will ask if you want to add your Medicaid waiver payment to your income for this credit?

Select yes to boost your income and give you a higher credit.

If your other income is already high, adding this could push you over the limit so you might want to try both ways.

Please correct me, If I am assuming wrong

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