I haven't had any of these clients with 2014-7 excludable wages that qualified for EIC, but I know its been discussed how to back those wages out from the EIC calculation.
Looks like some preparers have some amending to do and some clients get some additional $$ !
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I would recommend waiting a bit to see what the IRS says about it.
Maybe I'm reading too much into it, but I get the impression that the Tax Court disagreed that 2014-7 should even exclude those wages in the first place (but it did not make a ruling about that).
I would recommend waiting a bit to see what the IRS says about it.
Maybe I'm reading too much into it, but I get the impression that the Tax Court disagreed that 2014-7 should even exclude those wages in the first place (but it did not make a ruling about that).
In some cases, yes!
Just did a return for a client with the waiver that qualifies for EIC but Lacerte is using all of the income to calculate the EIC credit. Example Client had $44000 of income, $15000 of Medicaid waiver income included in that amount. EIC is using all $44000 of income to calculate the credit not the $29,000. This makes about a $2000 difference in the credit. Is this correct?
The instructions seem to indicate you can "choose" to include it if you want. So you can pick the way that has the best results. 😁
Certain Medicaid waiver payments you received for caring for someone living in your home with you may be nontaxable. If these payments were reported to you in box 1 of Form(s) W-2, include the amount on Form 1040 or 1040-SR, line 1. Also, include on line 1 any Medicaid waiver payments you received that you choose to include in earned income for purposes of claiming a credit or other tax benefit, even if you did not receive a Form W-2 reporting these payments. On line 8, subtract the nontaxable amount of the payments from any income on line 8 and enter the result. If the result is less than zero, enter it in parentheses. Enter “Notice 2014-7” and the nontaxable amount on the dotted line next to line 8. For more information about these payments, see Pub. 525.
Hello, I have the same problem too. When I browse the Pub 596, the wording is very confusing under "Figuring Earned Income".
Certain Medicaid waiver payments may be excluded from income under
Notice 2014-7. You may include these payments in
earned income if you benefit from the inclusion. For
more information about these payments, see Pub. 525.
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