Medicaid Waiver Payments May Be Excludable From Income
Does FreeTaxUSA software include "Medicaid Waiver Payments is Excludable From Income"?
Best Answer
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After you have entered the W-2, go to Income -> Uncommon Income -> Other Income.
Scroll down until you see a line that says, “Medicaid Waiver Payments to Care Provider”. Once you say Yes, you should see a space to enter the non-taxable payments that were reported on your W-2 (Box 1).
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Answers
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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.
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I received these payments and I entered them in the Wages Screen. Now what? Where do I enter them to subtract them from my income??
If nontaxable Medicaid waiver payments are reported to you as income in
Box 1of
Form W-2, you can subtract out the nontaxable amount of the payments from your income
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Thank you for joining our community, Tishlaw.
You will need to navigate to the Other Income section. You need to Click the Income menu (tab) and click the link for Other Income. On that page scroll down to the question Medicaid Waiver Payments to Care Provider and answer the question, Yes. This will cause boxes to appear for you to enter the W-2 wage income that qualifies to not be included in your tax return.
If you have further questions, please visit the Support center located in the top right of your screen to contact our Support teams directly
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What if the W2 doesn't report any income in box 1, just 3 & 5, and you have Social Security taxes (box 4) and Medicare taxes (6) with held, too? Do you still put a number into box 1 (same # box 3 & 5)?
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Thank you for this reply.
Please do not alter any information reported on a physical W-2. If you feel that the W-2 is not showing the correct information, the best next step is to contact the company that issued the W-2 to clarify why box 1 was not the same as boxes 3 & 5.
Altering the W-2 within your FreeTaxUSA input pages may end up with an incorrectly filed tax return.
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My difficulty of care excluded Medicaid payments were issued 1099. In that case how do i enter them? Further more, how do i include them for EITC but exclude them from tax?
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Hello Shubbywax,
I have included instructions from the IRS in one of your previous questions for how to enter Medicaid Waiver Payments reported on a 1099-MISC or 1099-NEC. If you have additional questions, I would recommend that you contact us directly from the support center in your account. Here in the community we give general instructions-if you contact us from your account, we will be able to see your account-specific information and assist you better.0
