Under IHSS Notice 2014-7 it's supposed to non-taxable if I'm living and working from home. How would I do this if I'm filing my own taxes online?

[Yaba J Daba]

If the employer withheld Social Security and Medicare taxes, and it is not taxable under notice 2014-7, and it's not being entered into Withholding not already entered on W-2, how does the software know to substract these taxes? The W-2 isn't being included, so it seems the information isn't being entered anywhere in the filing.

@Critter-3

[MonikaK1]

If you receive a W-2 for IHSS / Difficulty of Care / Medicaid Waiver payments addressed by IRS Notice 2014-7, and you have amounts in Boxes 3 through 6, you should enter the W-2 in TurboTax in the W-2 section. 

If there is a zero in Box 1, follow these steps:

1. Sign in to TurboTax and open your return.
2. Select Search, enter w-2, and select Jump to w-2.
3. Enter all your W-2 info.
4. On the Let’s check for uncommon situations screen, select the box next to Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.
5. Enter the amount of Medicaid waiver payments into the difficulty of care payment you received from IHHS box.
   • This is the same amount reported in boxes 3 and 5 of your W-2.
   • Your payments are nontaxable, but TurboTax uses this number to calculate credits you may qualify for.
6. When you get to the Earned Income Credit section in Deductions and 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.

Before this procedure was available in TurboTax for payments reported on a W-2, there was another method where the payments were reported under Miscellaneous Income. Steps for both are covered under the current TurboTax help article.

See this IRS FAQ page for more information regarding Medicaid Waiver payments.

@Critter-3  @Yaba J Daba 

[Yaba J Daba]

Thank you

This almost fits my situation, except there isn't a 0 in box one, but rather, wages earned. I'm not sure if this will change the calculation.

@MonikaK1

[JamesG1]

The procedure outlined by @MonikaK1 should be followed.

Report the income in Box 1 as it is displayed.

At the screen Let's check for uncommon situations, select Nontaxable Medicaid waiver payments that qualify as difficulty of care payments.

The difficulty of care payments will be deducted on Schedule 1 Additional Income and Adjustments to income line 8s and IRS form 1040 line 8.

@Yaba J Daba