caregiver - wages exempt - 2014-7 IRS notification

[JOHNNYCPA]

Is there any instructions on excluding wages (caregiver payments) from income.  Mother received care giver payments ( medicaid waiver) for her son that lives in his own apartment.  Mother recieved W2 where federal wages are shown in box 1 .  For her situation, I think her wage is taxable because she did not live with son.    I am alittle baffled because we rely on the reported wages per W2. 

thanks for your help.

John

[George4Tacks]

From @Just-Lisa-Now- a few years ago

"Other income line, use the description   Excluded wages per IRS Notice 2014-7 enter a negative"

[Jim-from-Ohio]

I think it is taxable if the son does not live with the mother

[qbteachmt]

"received care giver payments ( medicaid waiver) for her son that lives in his own apartment."

Is the child the employer or an agency or the State/County, on the reporting form? Where do you see something telling you this qualifies for medicare "difficulty of care" waiver? There are a couple of tests for eligibility, but there are some exceptions for working for your own children under 21 as household help (Medicare and Social Security exemptions). These are some standard qualifiers for 2014-7, though:

"under a state Medicaid Home and Community-Based Services waiver program"

"depend on the nature of the payments and the purpose and design of the program"

"to receive care in the individual care provider's home"

https://www.irs.gov/irb/2014-04_IRB#NOT-2014-7

https://www.irs.gov/individuals/certain-medicaid-waiver-payments-may-be-excludable-from-income

[Just-Lisa-Now-]

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@George4Tacks wrote:

From @Just-Lisa-Now- a few years ago

"Other income line, use the description   Excluded wages per IRS Notice 2014-7 enter a negative"

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thats only if they live together, if the son lives somewhere else, as far as I know, its not excludable.

[Jim-from-Ohio]

@Just-Lisa-Now- Lisa.. it's even easier then doing that now.  To show the exclusion if it applies.. simply scroll down the W-2 worksheet and check the box for medicaid waiver box in Part VI of the W-2 worksheet. 

[Just-Lisa-Now-]

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@Jim-from-Ohio wrote:

@Just-Lisa-Now- Lisa.. it's even easier then doing that now.  To show the exclusion if it applies.. simply scroll down the W-2 worksheet and check the box for medicaid waiver box in Part VI of the W-2 worksheet. 

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I still have one that I do manually, its all the income she has and shes got withholding on it, if I exclude 100% of the income, then we cant Efile (withholding cant exceed income), so I have to exclude only enough to leave $1 more than withholding, she still zeros out with zero taxable income, but we're able to Efile the return!

[TaxGuyBill]

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@JOHNNYCPA wrote:

Mother recieved W2 where federal wages are shown in box 1 . 

For her situation, I think her wage is taxable because she did not live with son.   

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The W-2 shows the income in Box 1.  You are right, it is taxable because she did not live with the son.

Just enter the W-2.  Nothing else needs to be done.

Or am I misunderstanding something?