EIC and Medicaid Waiver Payments

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  • mar14
    Junior Member
    • Oct 2020
    • 8

    #1

    EIC and Medicaid Waiver Payments

    Since non-taxable Medicaid Waiver payments now qualify for EIC does that mean these payments could also disqualify you for EIC? Are they to be like combat pay and you get to choose which is most beneficial to include or exclude from EIC calculations?
  • TaxGuyBill
    Senior Member
    • Oct 2013
    • 2319

    #2
    The Instructions for Form 1040 indicate you can "choose" to include it or to exclude it. So you can pick whichever way gives the best result.

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    • Bonnie
      Senior Member
      • Jan 2007
      • 568

      #3
      Since when did the law revert back to you get to choose whether to include medicare waver payments for EIC. I know it changed in 2014 that you could not longer use this income for EIC
      IRS 2014-7

      Comment

      • New York Enrolled Agent
        Senior Member
        • Nov 2006
        • 1530

        #4
        Originally posted by Bonnie
        Since when did the law revert back to you get to choose whether to include medicare waver payments for EIC. I know it changed in 2014 that you could not longer use this income for EIC
        IRS 2014-7
        Read the Tax Court case Feigh 152 TC No. 15

        Comment

        • Bonnie
          Senior Member
          • Jan 2007
          • 568

          #5
          Originally posted by New York Enrolled Agent

          Read the Tax Court case Feigh 152 TC No. 15
          Thank you for the information as I had no idea and I have several customers this affects

          Comment

          • TaxGuyBill
            Senior Member
            • Oct 2013
            • 2319

            #6
            Interestingly, although the court did NOT rule on this, the 'tone' of the court case indicates the IRS had no authority to state that Medicaid Waiver payments are non-taxable in the first place.

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