Hi all, I’m an IHSS Exempt Care Provider (Live-In) in California, and I’m running into an issue while filing my taxes using TurboTax.Here’s the situation:My W2 has $0 in Box 1 as it's exempted from Federal tax. My Box 3, 5, 12A have the same wage amount (let's use the fictitious number $5000) . I followed the instruction here and entered my W-2 information in Turbo Desktop Software.I checked the box for “Nontaxable Medicaid waiver payments” and entered the full amount from Box 3 (Social Security wages) into the Nontaxable Medicaid waiver payments section.However, when I get to the “Earned Income Credit” section under Deductions & Credits, TurboTax says "It turns out you don't qualify for this credit."I tried a few variations:First, I left Box 1 as zero (as it should be).Then, I tried filling in Box 1 with the same amount from Box 3 (Social Security wages).In both cases, I’m getting the same response from TurboTax in the Earned Income Credit section: "It turns out you don't qualify for this credit." Has anyone else experienced this issue? I’m trying to figure out if I’ve missed something in the process or if this is a common situation for IHSS providers. Any help or guidance would be greatly appreciated!Thanks in advance for your help! Screenshot below.

Delete the W-2 you entered and try to enter your IHSS payments by following these instructions: Select income Miscellaneous Income which is under Less Common Income Other Income Not already reported on a Form W-2 or Form 1099 Select Yes to did you receive any other wages Continue to the box that asks for your Medicaid Waiver payments You will be asked about using this income for the Earned Income Credit After you do this, you will need to visit the credits and deduction section to answer the Earned Income Credit questions. Continue through to file your returnAlso, are you sure you do qualify for the Earned Income Credit? Click here to be sure you qualify.

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BigRabit1

Question

IHSS Exempt Care Provider - Issues with Earned Income Credit After Filling Out W-2 Information

Forum|Forum|1 year ago
February 19, 2025
1 reply
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Hi all,

I’m an IHSS Exempt Care Provider (Live-In) in California, and I’m running into an issue while filing my taxes using TurboTax.

Here’s the situation:

My W2 has $0 in Box 1 as it's exempted from Federal tax. My Box 3, 5, 12A have the same wage amount (let's use the fictitious number $5000) . I followed the instruction here and entered my W-2 information in Turbo Desktop Software.
I checked the box for “Nontaxable Medicaid waiver payments” and entered the full amount from Box 3 (Social Security wages) into the Nontaxable Medicaid waiver payments section.
However, when I get to the “Earned Income Credit” section under Deductions & Credits, TurboTax says "It turns out you don't qualify for this credit."

I tried a few variations:

First, I left Box 1 as zero (as it should be).
Then, I tried filling in Box 1 with the same amount from Box 3 (Social Security wages).

In both cases, I’m getting the same response from TurboTax in the Earned Income Credit section: "It turns out you don't qualify for this credit."

Has anyone else experienced this issue? I’m trying to figure out if I’ve missed something in the process or if this is a common situation for IHSS providers. Any help or guidance would be greatly appreciated!

Thanks in advance for your help!

Screenshot below.

TurboTax Home & Biz Windows

V

Vanessa A

Delete the W-2 you entered and try to enter your IHSS payments by following these instructions:

Select income
Miscellaneous Income which is under Less Common Income
Other Income Not already reported on a Form W-2 or Form 1099
Select Yes to did you receive any other wages
Continue to the box that asks for your Medicaid Waiver payments
You will be asked about using this income for the Earned Income Credit
After you do this, you will need to visit the credits and deduction section to answer the Earned Income Credit questions.
Continue through to file your return

Also, are you sure you do qualify for the Earned Income Credit? Click here to be sure you qualify.

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B

BigRabit1Author

Thank you!

1. You are correct that I don't qualify for the Earned Income Credit. I won't be able to claim it.

2. But are you sure I don't report this W2 in the standard Turbo W2 section? If I use your reporting method, how would I ensure that my SS wage and tax withheld, Medicare wage and tax withheld from my W2 are properly reported and recorded?

Should I do the following?

Still add the W2, including Box 3,4,5,6,14.
Then leave Box 1 and 12A empty, as I have reported the tax-exempt income in the Miscellaneous Income section?

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DianeW777

Yes, you should not be taxed on the income due to special tax laws surrounding this medicaid waiver care. Use the link below to enter your W-2 for these wages. It should not be taxable on your return and there is no concern about your social security and medicare tax withheld.