IRS 2014-7 Notice family caregiver questions

Warrior

I am my mom's caregiver and I get paid to take care of her through a state program. We live together. I received a 1099-NEC from my home health agency. I heard that I do not have to pay taxes on his income earned of taking care of my mom based on IRS 2014-7.

1. I'm using FreetaxUSA to file my taxes. Where should I input this income in tax form so that I can apply IRS 2014-7? Should it be as "other income - Wages not on a W-2 (Form 8919)"?
2. There is a section noted as "Enter nontaxable Medicaid waiver payments included in Box 1 of your W-2s:". Is this where I put my caregiver income, despite having received a 1099-NEC instead of a W2?

MatthewD

Hi Warrior,

I am sorry, but we do not currently have a simple provision to use the 2014-7 for a 1099-NEC. I will explain how to deal with it below. First…

1. No, do not enter that on 8919
2. If you qualify for the earned income credit, you should enter it the amount in the Other Income section on the line, "Enter nontaxable Medicaid waiver payments included…" so you can get the EIC this year.

Essentially a 1099-NEC must be reported on a Schedule C. But since this is nontaxable, let me explain what to do:

1. Start a Schedule C and report the 1099-NEC
2. Continue till you can add Common Expenses.
3. On the Common Expense page, go to the bottom under Other Misc Business expenses and enter this description, "Medicaid Waiver 2014-7" and the same amount on the 1099-NEC.

This will add the income, but expense it for the same amount. Essentially an "In and Out" entry.

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