Medicaid Waiver Payments May Be Excludable From Income

luoyining88 Member Newcomer
edited January 15 in Retirement Income

Does FreeTaxUSA software include "Medicaid Waiver Payments is Excludable From Income"?


  • KristineS
    KristineS FreeTaxUSA Agent

    Hi luoyining88,

    Yes, FreeTaxUSA software allows you to exclude Medicad Wavier payments, also know as difficulty of care payments.

    If you're an eligible care provider and you received Medicaid waiver payments for caring for an eligible individual living in your home under a state waiver program's plan of care, the payments are treated as nontaxable difficulty-of-care payments and must be excluded from your gross income.

    If nontaxable Medicaid waiver payments are reported to you as income in Box 1 of Form W-2, you can subtract out the nontaxable amount of the payments from your income.

    There are two different places to enter Medicaid waiver payments. Where you enter them depends on how you received the payment:

    • If you received these payments in box 1 of Form(s) W-2, enter them on the Wages (W-2) screen.

    • If you didn't receive a W-2 for these payments, you can enter them on the Other Income screen if you'd like to add them to your earned income.