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TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 13119
Experience:  15 years of experience in financial advising with emphasis on tax issues.
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I am my daughters Individual Care Provider in the state of WA. I was

Customer Question

I am my daughters Individual Care Provider in the state of WA. I was recently made aware that under Tax Code 131 payments I receive are considered "difficulty of care payments" and are excluded from Fed Tax payment. I did read the code and that does sound correct. How to I file the income received on my tax return. I use Turbo Tax. And can I do , and how do I do an amendment as it was effective for payments received on or after 1/2/2014
Thank you
Submitted: 6 months ago.
Category: Finance
Expert:  TaxRobin replied 6 months ago.
HelloIf this was reported to you in Box 3 of Form 1099-MISC and you choose to apply the IRS Notice for NonTaxable to payments received in 2015, you would not include the payments on Line 21. If you are filing electronically, do not report the Form 1099-MISC. If you file a paper return, write "Notice 2014-7" to the left of Line 21. You would do the same for amending.You can amend a prior year in TurboTax and remove the 1099MISC. In the reason section for changes you list "Notice 2014-7"You are required to click a positive rating if I am to be credited with the response.You have to actively click on a rating and click submit. Smiley Faces or Stars.
Customer: replied 6 months ago.
Your answer addressed 1099MISC. I received a W-2 form NOT a 1099 MISC. Does that mean I do not qualify for the tax exemption in Tax Code 131 under "difficulty of care payments"for being my daughters Individual Care Privider because I received a W-2 NOT a 1099MISC???
If I do qualify having received a W-2 how do I capture the exemption using TurboTax for 2015. How do I do an amendment for 2014 with receiving a W-2.
Expert:  TaxRobin replied 6 months ago.
Thank you for adding that.You would enter the W2 as usually but you will also report the excludable amount as a negative adjustment on Form 1040, Line 21.This will subtract the wages form the income on the 1040 form.You would enter "Notice 2014-7" on line 21 as the description
Expert:  TaxRobin replied 6 months ago.
The amendments will work the same. You will just need to "add" a negative entry on Line 21 as "Notice 2014-7"

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