Medicaid Waiver Payments

Qualified Medicaid waiver payments are payments by a state, a political subdivision of a state, or a certified Medicaid provider under a Medicaid waiver program to an individual care provider for nonmedical support services provided under a plan of care to an individual (whether related or unrelated) living in the individual care provider’s home.

For detailed information on treatment for income tax purposes and for FICA, see: http://www.irs.gov/Individuals/Certain-Medicaid-Waiver-Payments-May-Be-Excludable-From-Income

Note that, according to IRS Pub. 596 “Medicaid waiver payments you exclude from income are not earned income for the earned income credit.”