W2 - Box 12a

[taoliver3]

All my income is exempt under notice 2014-7 for being a live in care provider. So I have 0.00 taxable income on my W2 as expected. But now there is 50,000+ listed in Box 12a code II due to 2024 changes.

My questions are:

1) Do I now need to file taxes and report just Box 12a somewhere, even though its non taxable income and I have 0.00 in total income/wages. This is my only W2 as I only have income from this single source.

2) Even though I'm 100% exempt from income tax, am I still required to pay Social Security tax somehow?

[SabrinaD2 · Accepted solution]

Here’s how to address your questions regarding Box 12a with code "II" under IRS Notice 2014-7:

1. Do I now need to file taxes and report just Box 12a, even though it’s non-taxable income?  Even though the income in Box 12a (code II) is not taxable under IRS Notice 2014-7, filing a tax return can help make sure the IRS has a record of your income and its nontaxable status. This will prevent any future mistakes.
2. How to report it in TurboTax:
   1. Go to the Income section and click on the pencil next to W-2.
   2. Enter your W-2 details, including the amount from Box 12a with code "II."
   3. TurboTax will recognize this as excludable income under IRS Notice 2014-7 and will not include it in your taxable income.
3.  Am I still required to pay Social Security tax somehow?  Under current IRS rules, generally payments to live-in care providers are not included in income tax or Social Security and Medicare (FICA) taxes. This is according to IRS Notice 2014-7. 

For further guidance, you can refer to these resources:

• TurboTax Support Article on Medicaid Waiver Payments
• IRS Notice 2014-7 Guidance

Let me know if you need additional clarification!