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13335: 1040 - Notice 2014-7 Payments


1040 Individual Data Entry

Where do I enter payments described in Notice 2014-7?

In some cases certain payments made to taxpayers through the foster care system or by Medicaid CNA are reported on a W2 or 1099-MISC but may be excluded under this notice and removed from the return.

If the taxpayer received payment as described in Notice 2014-7, report the payments in DrakeYY as follows.

Taxpayer Received Form W2

  1. Open the W2 screen.
  2. Enter information as presented on the W2 received by the taxpayer.
  3. Open screen 3 (Income).
  4. Enter the amount from Box 1 of the W2 on line 21 in the amount field titled W-2 income excluded per Notice 2014-7.

Taxpayer Received Form 1099-Misc (Box 3)

  1. Open the 99M screen.
  2. Enter information as presented on the 1099-MISC received by the taxpayer.
  3. Open screen 3 (Income).
  4. Enter the amount from Box 3 of the 1099-MISC on line 21 in the amount field titled W-2 income excluded per Notice 2014-7.

Taxpayer Received Form 1099-Misc (Box 7)

  1. Open the 99M screen.
  2. Enter information as presented on the 1099-MISC received by the taxpayer.
  3. Open screen C (Self-Employed Income).
  4. Enter the amount from Box 7 of the 1099-MISC in the amount field titled Income to be excluded per Notice 2014-7, located under Part II, Expenses, on the C screen.

The software will print an explanatory statement next to line 12 (if the amount was entered on Schedule C), or line 21 (if the amount was included in W2 wages).


In Drake19, Notice 2014-7 income is included the EIC calculation by default. If you wish to exclude Notice 2014-7 income from earned income and have it omitted for Earned Income Credit purposes, check the box Exclude Medicare waiver payments from the earned income credit calculations on the 8812 screen.

In Drake18, the Notice 2014-7 income was not included in EIC calculations by default. To include those amounts in EIC calculations, use the checkbox on the 8812 screen under Notice 2014-7 Income. 

For more information on Notice 2014-7 visit the IRS Notice 2014-7 website.



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