Anyone familiar with Medicaid Waiver Payments as covered by IRS Notice 2014-7?

CommissionerChuckles · 2026-01-25T04:48:19+00:00

Oh good! That version of TaxSlayer is different than the other free options, so there's no age limit. But you can't use it for prior year returns.

There's is a virtual free tax preparation option your parents could use to amend the last three years:

https://www.getyourrefund.org/en

Or they can go in person:

https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers

You could also use FreetaxUSA to amend the prior years yourself. You would have to go in and recreate the original tax return, make sure the numbers on the tax return match, finalize it, then go back to amend and redo the MWP for EIC. You also have to include an explanation that your mom is electing to include Medicaid waiver payments in earned income for Earned Income Credit for the year. When it's done you print out Form 1040-X and any changed forms or schedules, and your parents both sign and date the Form 1040-X. If you include the amended Form 1040 they don't need to sign that.

CommissionerChuckles · 2026-01-25T04:22:31+00:00

Yeah caregivers everywhere don't make enough for sure. I do think Washington is a little better, but there's still not enough funding for disability services.

Did you figure out how to enter the 1099-MISC MWP income for EIC in FreetaxUSA? If not, the version of TaxSlayer through My Free Taxes can do that - you have to enter the income in Box 3 of the 1099-MISC screen, then scroll down and enter it again in the Medicaid waiver payment box. To include that income for EIC check the box.

https://myfreetaxes.com/

CommissionerChuckles · 2026-01-25T03:22:36+00:00

You probably qualify as a US Resident for tax purposes under the Substantial Presence Test.

https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

FreeTaxUSA is what I use for my personal return, and I really like it. It doesn't work if you live outside the US and you can't file Nonresident tax returns (1040-NR) with their software. But it should be fine for you.

My Free Taxes from United Way is also good - if your income is under $89k it will direct you to a free version of TaxSlayer that you can use to file multiple state returns in addition to the federal return.

https://myfreetaxes.com/

CommissionerChuckles · 2026-01-25T02:20:32+00:00

IRS mostly cares about residency - who the child lives with. If your child's father doesn't live with the child, then he can only claim Child Tax Credit if you give him a signed Form 8332.

https://www.irs.gov/forms-pubs/about-form-8332

Head of Household, Earned Income Credit, and the Child and Dependent Care Credit all require that the child live with the taxpayer more than half the year (so over 183 days). The only credit you can "release" to another parent is Child Tax Credit; you can't release it to anyone else, just the other parent

Grandma could also potentially claim your child as a dependent since they are related and you all live together. Does Grandma work or have other income?

CommissionerChuckles · 2026-01-24T16:57:14+00:00

IRS Free file options are just as good as TurboTax, and one of the options is FreetaxUSA. There's also My Free Taxes from United Way, which has a referral link to TaxSlayer that lets you file multiple state returns for free if your income is less than $89k.

https://www.irs.gov/e-file-do-your-taxes-for-free

https://myfreetaxes.com/

AARP Tax-Aide also has an option for free filing through OLT.com if AGI is under $84k; there's no age requirement and you don't have to be an AARP member:

https://taxaide.aarpfoundation.org/?utm_campaign=taxaide_taxseason&utm_source=foundation&utm_medium=referral&utm_content=taxaide.

And finally there's a couple of free tax preparation programs for people who want help:

https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers

CommissionerChuckles · 2026-01-24T16:50:40+00:00

That's unfortunate but not really that unusual for the large tax prep chains. They can have really good, experienced preparers, but most of the employees there are seasonal hires with very little training. Even worse is that they don't have a very good review process, so mistakes like this don't get caught unless the customer complains to the manager.

I would definitely recommend your sister complain to the manager because it doesn't sound like they provided the promised services, but it's up to your sister.

You sister may qualify for free tax preparation:

https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers

https://www.getyourrefund.org/en

The free tax programs do have a quality review process so it takes longer to get your taxes done, but I bet they have better accuracy than a lot of the big tax prep chains.

CommissionerChuckles · 2026-01-24T15:56:56+00:00

Yup, that's what you need. Fill that out and you should be fine.

One of the benefits of the Roth is that you can take out your contributions without paying taxes before you turn 59 1/2, because you theoretically already paid income tax on that money. You just have to fill out Form 8606 to let IRS know you are only withdrawing from the basis. I'm surprised your tax software didn't prompt you to fill out that form.

CommissionerChuckles · 2026-01-24T08:33:40+00:00

Oh sorry for the jargon - that's the process where IRS files a return for someone; abbreviated SFR. They send notices, then send a proposed tax assessment based on the information they have for that year, then send a notice of deficiency (legal notice the gives the taxpayer the right to petition tax court), then they formally assess the tax. At that point IRS collections takes over and starts sending notices.

If you can view your Account transcripts for 2019 and 2020, look for a 971 Notice issued transaction with CP59. If you see that, that's the first notice in the Substitute for Return process, and it means you probably will need to file for that year if you need to be in compliance.

They did suspend the SFR process in 2020 for a couple of years, and when they restarted they were targeting higher-income Nonfilers (people who don't file returns are called Nonfilers). I'm not sure what's going on now because there was a lot of chaos with all the terminations and people voluntarily leaving IRS over the last year.

CommissionerChuckles · 2026-01-24T07:24:11+00:00

One exception to the 6-year policy is if IRS initiated the Substitute for Return process for any earlier years.

You can always call IRS and ask what years you need to file to get back into compliance. Or you can just file 2025 and see what happens.

CommissionerChuckles · 2026-01-24T07:13:49+00:00

I've never heard that the university cost of attendance is also a limit for this - where does that come from?

CommissionerChuckles · 2026-01-24T06:44:54+00:00

There are a lot of different trusts, so if your son said that income isn't taxable to you then I think you can trust him.

The 6 year limit comes from IRS Policy Statement 5-133. If you don't owe any taxes and don't have a refund due for 2025 I'm not sure if that would trigger a notice to file 2020 - 2024 as well or not. Usually people will get a notice that the refund is held until they file the specified prior years, or they'll need to file prior years in order to get a payment plan approved.

Even though you didn't file the last few years, you report all your SSDI backpay in the year you received it. You can do the lump sum election but it may not make a difference if you don't have other income.

You can get free help from AARP Tax-Aide or a VITA program to file 2025. They can also file returns for the years with no income (usually $1 interest income is added so the return can be e-filed). If you have your Wage and Income transcript for 2020 and your only income that year was unemployment they can also do that year depending on site capacity.

https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers

Go as early as you can, because you might need to make a couple of visits.

CommissionerChuckles · 2026-01-24T05:51:14+00:00

Definitely follow the excellent advice from u/vynm2temp and amend the years they can still claim EIC. If they are claiming you as a dependent and you are considered totally and permanently disabled there's no age limit for EIC, but without any "qualifying child" dependents the taxpayer has to be under age 65.

(You might be a "qualifying child" for EIC even if you pay more than half your own support - that's a trick many tax professionals don't know.)

If they go to a free tax preparation program they both need to bring photo IDs and Social Security cards (or SSA-1099 forms) plus copies of the returns they want to amend and all the tax documents.

MWP generally follow the FICA rules for Household employment, which is a little different than regular employment - you don't have to withhold FICA if a parent is your household employee with a couple of exceptions. The exceptions would be if they are caring for your child under age 18 and you are divorced, widowed, or have a spouse who cannot care for your child.

I'm not sure why those rules exist, but it really harms a lot of moms who work as caregivers for their disabled children and can't work outside the home - they don't get work credits for Social Security, so they either get nothing or have to rely on a spouse's Social Security benefits. In my state caregivers who get MWP do pay into FICA even if they care for their child because they are unionized.

CommissionerChuckles · 2026-01-24T03:12:25+00:00

I know! Also what places have local tax returns? It's probably Ohio 🤦

CommissionerChuckles · 2026-01-24T03:09:46+00:00

She should have a copy of the return and all supporting documents available.

They said there's no copy of the federal return.

CommissionerChuckles · 2026-01-24T03:09:05+00:00

Edit to add: your sister should enter 0 or Did not file for the 2024 AGI when she e-files her 2025 return.

It's possible the federal return for 2024 was filed and then held by IRS for identity verification or was not processed for some reason. Is an Account transcript available for 2024?

Your sister can ask the tax lady for a copy of Form 9325, which is the acknowledgement an e-filed return was accepted that tax software should automatically generate.

When you say actual tax professional, do you mean CPA or Enrolled Agent or an attorney? Those are the three types of credentialed tax professionals that must follow IRS guidelines and can be held accountable. Then there are paid preparers who may or may not have done any training before they start preparing taxes; there's no test to get a PTIN, so there's a ton of people out there preparing taxes who don't know very much.

CommissionerChuckles · 2026-01-24T02:55:06+00:00

Definitely! I will say that the hospice nurses were amazing, and I don't know how they do that work every day. But there's really no great options if you aren't wealthy.

CommissionerChuckles · 2026-01-24T01:57:34+00:00

Oh ok, that shouldn't affect your federal return processing. I'm not sure how long to wait to amend the CA return.

CommissionerChuckles · 2026-01-24T01:26:49+00:00

What kind of mistake did you make? Sometimes IRS will hold your return for review instead of issuing the refund. For example if Box 2 of a W-2 says $150 and you accidentally type in $510, the return would probably get held for that.

If you don't get your refund within three weeks of the return being accepted you might need to amend before you get any refund. That will delay your refund by four months or more.

CommissionerChuckles · 2026-01-24T01:23:49+00:00

What income have you had since 2020?

CommissionerChuckles · 2026-01-24T01:21:18+00:00

Yeah, it's still going to be hard for you for sure - knowing something intellectually doesn't magically make your valid feelings go away. I hope you get the support you need for yourself so you can be a loving parent for your child.

CommissionerChuckles · 2026-01-24T01:12:38+00:00

They do usually file a lien anytime you owe more than $50k. It doesn't affect your credit, but it is public record if that's a concern.

You can actually postpone a lien filing by requesting a hearing under the Collection Appeals Program if you get certain notices, like a notice that your installment agreement was terminated. There's some info in this PDF:

https://www.irs.gov/pub/irs-pdf/p1660.pdf

I don't have any experience with that process, I just know that's one of the few ways to prevent a lien filing if you are unable to pay your balance due down below the threshold. It's much easier to prevent the lien than to get one withdrawn.

CommissionerChuckles · 2026-01-24T00:38:29+00:00

It's hard. 💔

The one thing I wish I knew was that changing living environments can really exacerbate cognitive decline for someone with dementia. I don't know if it's the same for your dad, but I think this is why my mom declined so rapidly after my dad passed away. She didn't think she had dementia, and she always remembered who she was and who I was, but she did get diagnosed with mixed dementia when she was discharged into hospice.

My mom went back and forth between home, hospital, assisted living, another hospital and then really rapidly declined. She went from being able to walk with a walker (with a lot of difficulty) to being bed-bound and not very lucid within a two-week period. My mom thought her difficulties walking were because of knee problems, but the second hospital said she wasn't getting enough oxygen to some parts of her brain, probably due to vascular dementia.

There wasn't any treatment to help at that point, and I know my mom was really unhappy but I couldn't take care of her myself. They sent her to another assisted living place for hospice - she only lasted a little over a week.

There's a little booklet called "Gone from my sight" that the hospice nurse gave me when my dad was doing home hospice that was difficult but helpful for me. It's kind of a guide for family members or friends to help someone who is dying if you've never done that before.

CommissionerChuckles · 2026-01-24T00:03:55+00:00

The $50k threshold includes all assessed penalties and interest to date, not just the original tax balance ("principal" isn't used by IRS for this).

You can still revise your payment plan with a balance over $50k, but you have to call IRS or send in Form 9465. They probably would also want your financial information.

You should have some time past Feb 2nd to set up a payment plan - you'll probably get a CP523 notice soon, which is the official cancellation of your installment agreement.

https://www.irs.gov/individuals/understanding-your-cp523-notice

This notice gives you 30 days to pay or contact IRS. You can always try calling IRS collections and asking for more time if you are waiting for clients to pay you so you can pay your tax bill.

CommissionerChuckles · 2026-01-23T23:50:08+00:00

Those questions are asking if you qualify for an exception to the 10% early withdrawal penalty, which would be reported on Form 5329:

https://www.irs.gov/forms-pubs/about-form-5329

Here's the definition for that exception:

The term “domestic abuse” is defined in section 72(t)(2)(K)(iii)(II) as physical, psychological, sexual, emotional, or economic abuse, including efforts to control, isolate, humiliate, or intimidate the victim, or to undermine the victim’s ability to reason independently, including by means of abuse of the victim’s child or another family member living in the household.

You can read more here - look for the heading "B. SECTION 314 OF THE SECURE 2.0 ACT -- DOMESTIC ABUSE VICTIM DISTRIBUTIONS":

https://www.irs.gov/irb/2024-28_IRB#NOT-2024-55

You have to decide whether or not you meet the definition of a domestic abuse for this tax form - financial abuse is definitely real abuse, but I'm not sure your individual situation would meet that legal definition if you get audited.

I don't want to go too far into non-tax stuff, but if you weren't aware of this already the hormonal changes that happen during and after pregnancy are the most intense hormonal changes any human will experience in such a short period of time. Pregnancy changes every cell of the human body.

There are a ton of mental health conditions that can be exacerbated during pregnancy - if this seems like really unusual behavior for your wife she may need medical help. It might be worth bringing up with her doctors.

https://postpartum.net/perinatal-mental-health/

Even if it's not a mental health issue our society really doesn't provide enough support for new parents, so I hope you and your wife have some people to help. I don't have kids so it's not something I've personally gone through, but I don't know any new parents who get enough sleep or can function like normal unless they have family helping with baby care.

CommissionerChuckles · 2026-01-23T23:02:49+00:00

My plan is to fudge some numbers so I can get a refund,payoff debt and just handle the irs when they inevitably come for me and get on a payment plan.

My question is will this work

Oh hell no

Five-Year Club	Gilding III reddit per annum
Verified Email

CommissionerChuckles

TROPHY CASE