GingerU
Level 2
‎04-01-2020 12:40 PM
I don't know if anyone else has dealt with this, but I have a customer that receives Medicaid Waiver Pmts. The money is not included in income per the IRS Notice 2014-7. In the past, ProConnect Online did not include this as income for EIC, but now it is. We don't want it to because it puts their income over the limit for EIC. Per the 2019 IRS pub 596: You may include these payments in earned income if you benefit from the inclusion. This customer receives a W-2 for the payments (her choice as she wanted to have tax withholding), so it is being picked up as income for EIC purposes in ProConnect. There is an adjustment box in the EIC entry section, but I hate to use those...however, if I want to back the Medicaid waiver pmts off of earned income, I may have to. The Tax Court case Feigh (2019) 152 TC No. 15 comes into play, but it still is not clear that it "must" be included in earned income for EIC. It is interesting to note that the state return backs the payments off for their EIC calculation.  Any thoughts? 
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