So whats the proper way to input these W2s with Medicaid waiver income?

[Just-Lisa-Now-]

Box 1 cant be empty or you cant EFile, but if you put anything in Box 1, it adds to income.   The waiver income in Box 12 Code II seems to do what its supposed to, but the empty Box 1 screws it up.

Do we just trick the program and put $1 in Box 1?

[Jim-from-Ohio]

1. enter w-2 as normal

2. scroll down on W-2 worksheet to Part VI

3. check the box Ka

4. enter amount from the W-2 again in Box Kb

The End

[Terry53029]

@Jim-from-Ohio Had a client (had for years same every year). she was rejected for EIC because the IRS computer looked at box 1, and income too high (had multi W2's, and not all were Medicaid Waiver)  . ProSeries took it out in schedule 1, so she wasn't taxed on the income, but that income can be used for EIC. caused a big hassle for me with IRS, and she got her EIC (a year late) I will not do as PS says, but I will make sure he Medicaid waiver payments don't wind up in box 1 this year.

[Just-Lisa-Now-]

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@Jim-from-Ohio wrote:

1. enter w-2 as normal

2. scroll down on W-2 worksheet to Part VI

3. check the box Ka

4. enter amount from the W-2 again in Box Kb

The End

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That new code in Box 12, the II  screws that up.  It automatically puts in down in Part VI Line Kc so if I enter it on Kb, it errors on that line and it still disallows EFiling, due to the zero in box 1.

[Jim-from-Ohio]

I am not using the code in box 12 when I do these

[Just-Lisa-Now-]

Im confused, these W2s come with nothing in Box 1, and a dollar amount in Box 12 with Code II

Are you saying you put a dollar amount in Box 1 and then put the same amount down in Part VI and that amount from Box 1 in line Kb and skip Box 12?  

[Jim-from-Ohio]

Every single medicaid waiver W-2 that I have seen have a figure in box 1 of the W-2. I have not seen one yet for tax year 2024 so maybe something new this  year?  . so i just called up a 2024 return and see the new Code II in box 12.  Are you seeing W-2s with a code II in box 12 but blank in box 1?

[Jim-from-Ohio]

 update.. been looking in 2024 program and Code II is new.. some W-2s will have a figure in box one of the w-2 and some will not it seems.. if there is an amount in box one of the w-2 check Ka and enter amount in box Kb.  then by implication looking at part VI again, there is box c.  The implicaition here is that some W-2s will not have a figure in box one of the w-2.  so in those cases i woud follow the w-2 and not enter an amount in box one of the w-2 worksheet but enter it in box Kc