Advanced Scenario 3: Janice Billings and Andrew Noble Interview Notes Janice Billings, age 40, and Andrew Noble, age 45 are engaged and lived together the entire year . Janice moved her mother Dorothy in with them on December 1, 2019, due to Dorothys Alzheimers diagnosis . Janice received Medicaid waiver payments of $15,000 for the care of her mother. The payments were reported on Form W-2 . Dorothys only income was Social Security in the amount of $13,000, which she used for her own support . Andrew earned wages of $25,000 and was enrolled the entire year in a high deduct- ible health plan (HDHP) with self-only coverage . During the year, Andrew contributed $1,500 to his Health Savings Account (HSA). Andrews mother also contributed $1,000 to his HSA account. Andrews Form W-2 shows $500 in Box 12 with code W. He has Form 5498-SA showing $3,000 in Box 2. Andrew took a distribution from his HSA to pay his unreimbursed expenses: Urgent care bill: $375 Hospital bill: $1,200 Prescription medicine: $578 Dental bills for routine exams: $168 Over-the-counter allergy medication: $79 Yoga Classes: $600 Janice, Andrew, and Dorothy are U .S . citizens with valid Social Security numbers .

1 Which of the following statements is true?

a . Janices Medicaid waiver payments must be included in taxable income in order to be considered earned income when calculating the earned income credit .

b . Janices Medicaid waiver payments can never be considered earned income when calculating the earned income credit .

c . Janices Medicare waiver payments are not included in taxable income and are never considered earned income when calculating the earned income credit .

d. Janices Medicaid waiver payments are not included in taxable income but can be considered earned income for calculating the earned income credit .

2 . What is the amount of Andrews HSA deduction on Form 8889, Part I, line 13?

a. $1,500 b. $2,000 c. $2,500 d. $3,455

3 Andrew can identify the employers HSA contribution by the Code W in Box 12 on his Form W-2 .

a . True b . False

4 What is the total unreimbursed qualified medical expenses reported on Form 8889, Part II?

a. $2,025 b. $2,153 c. $2,321 d. $2,400