Updated October 17, 2026. Quick answer: Line 1d of Form 1040 is for Medicaid waiver payments that were not reported on your W-2. You enter the taxable ones, and you may also include the nontaxable ones if you choose to count them as earned income for a credit or other tax benefit. The amounts come from your W-2s and from Forms 1099-MISC or 1099-NEC.
What line 1d asks for
The form’s caption for the line reads “Medicaid waiver payments not reported on Form(s) W-2 (see instructions)”. The instructions start with the taxable payments: “Enter your taxable Medicaid waiver payments” that were not reported on a W-2. This is the plain case, and for many readers it is the whole line.
The choice about nontaxable payments
The instructions then add a second entry that is optional: “Also enter the total of your taxable and nontaxable Medicaid waiver payments that were not reported on Form(s) W-2, or not reported in box 1 of Form(s) W-2, if you choose to include nontaxable payments in earned income for purposes of claiming a credit or other tax benefit.”
If you and your spouse both received nontaxable Medicaid waiver payments during the year, the instructions say “you and your spouse can make different choices about including payments in earned income.” The instructions send you to the Schedule 1 side of it: “See the instructions for Schedule 1, line 8s.” Line 8s is on the Schedule 1 page.
If you are a home care provider
The instructions split the case by how the work is organized. First: “If you are a sole proprietor in a business of providing home care services, see the Schedule C instructions for how to report these amounts.” The Schedule C form is covered on the Schedule C page.
Second: “If you do not have a separate trade or business of providing these services, enter on Form 1040, line 1d, your Medicaid waiver payments reported on Form 1099-MISC or Form 1099-NEC.” The first of those forms is explained on the Form 1099-MISC page. The instructions finish the thought: “Also, enter your nontaxable Medicaid waiver payments on Schedule 1, line 8s.”
Where the number comes from
The instructions name the places to look: “Form 1099-MISC or Form 1099-NEC” for payments reported to you that way, and your W-2 for the rest. They also point to a particular W-2 box: “Your nontaxable Medicaid waiver payments may have been reported to you on Form(s) W-2, box 12, with Code II.” Box 12 codes are listed on the W-2 box 12 codes page.
A labelled illustration, not an IRS example: if you received $4,000 of taxable Medicaid waiver payments not reported on a W-2 and you choose to include $6,000 of nontaxable payments as well, the line 1d total under the choice is $4,000 plus $6,000 for a total of $10,000. The figures are made up to show the arithmetic only.
When not to attach your W-2
One more instruction concerns paperwork rather than the amount: “If you received nontaxable Medicaid waiver payments, and box 1 of your Form(s) W-2 is blank or has zeros, and you are choosing not to include nontaxable payments in earned income for purposes of claiming a credit, do not attach any of these Form(s) W-2 to your return.”
Where it goes next
On the form, the lines at the top of the income section feed one total. The form’s own caption for it reads “Add lines 1a through 1h”. That total is line 1z, and line 1d is one of the amounts added into it.
Line 1z then carries into the next step of the income section. The form’s caption for line 9 reads “Add lines 1z, 2b, 3b, 4b, 5b, 6b, 7a, and 8. This is your total income”. So whatever you enter on line 1d moves your total income, and the surrounding lines are explained in Form 1040 line by line.
Edition and line numbers
This page reads the 2025 Form 1040 and its 2025 instructions, the current files irs.gov served on 2026-10-17. They are the forms for the tax year 2025 return, filed in 2026. The instructions say “The lines on Forms 1040 and 1040-SR are the same.” so everything here applies to Form 1040 and to Form 1040-SR alike. Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently.
Common mistakes
- Treating the nontaxable amount as required. The instructions make it a choice: “if you choose to include nontaxable payments in earned income”.
- Using line 1d when you are a home care sole proprietor. The instructions say “see the Schedule C instructions for how to report these amounts”.
- Forgetting Schedule 1. The instructions say “Also, enter your nontaxable Medicaid waiver payments on Schedule 1, line 8s.”
Related: Schedule 1 (Form 1040), Schedule C (Form 1040), Form 1099-MISC, and W-2 box 12 codes.
Sources
- Instructions for Form 1040 and Form 1040-SR (2025): https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
- Form 1040, U.S. Individual Income Tax Return (2025): https://www.irs.gov/pub/irs-pdf/f1040.pdf
Read from the IRS documents linked above on October 17, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.