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Member

Entering tax free income

I have filed a difficulty of care form and now my W-2 form does not show earned income in box #1

It only reports it in box #16 of W-2 form.  this disallows EIC Tax Refund.

My employer tells me that my income is IRS tax free. So they can not Report income in Box#1

Where can I report this Income in order to qualify for EIC tax refund.  I have no other earned income

to report. My Income is exempt from IRS under code 2014-7

3 Comments
TurboTax Specialist

Entering tax free income

That's correct. Qualified Medicaid Waiver Payments for in-home support services are not reported in box 1 of the W-2. They are excludable from gross income and should not be included in your earned income.  They don't qualify for the Earned Income Credit (EIC).

 

For more information, refer to IRS Notice 2014–7, 20144 I.R.B. 445.

Member

Entering tax free income

thank you lindaA. Now I can submit my tax return.  What then is the advantage of filing Difficult of Care Form.

I am going to opt out of DofC status for my 2018 tax yr.

Thank You

Dino-1

TurboTax Specialist

Entering tax free income

@Dino-1 You are very welcome, and I'm glad your return is good to go. (Excluding these payments from gross income is the advantage, but perhaps not in every circumstance.)