Question

Medicaid waver payment did not result to return of income tax withheld

Forum|Forum|1 year ago
February 25, 2025
1 reply
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After I had put in the w2 information in Turbo Tax and clicked on “Nontaxable Medicaid waiver payments that qualify as difficulty of care payments” and checked “All of It”, I was expecting my estimated refund to increase by the amount of the withheld federal tax but instead, Turbo Tax decreased it. Why would that be?

KrisD15

The decrease in refund could be based on a lower Earned Income Credit, or adjusted some other credit on your return,

HOWEVER

if there were federal tax withheld on the W-2, that might indicate that the payments were something other than Difficulty of Care payments, or only PART of the income is Difficulty of Care payments.

A W-2 reporting only Difficulty of Care payments should have NO federal tax withheld.

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