EIC and Medicaid Waiver Payments

[mar14]

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]

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.

[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

[New York Enrolled Agent]

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

[Bonnie]

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

[TaxGuyBill]

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.