If you provide care in your home to an eligible person under your state’s Medicaid program and receive Medicaid payments for that care, you may be able to exclude some of those payments from your taxable income. The individual receiving care does not need to be related to the person providing care.
Go to this section in Credit Karma Tax: Other Income
If these payments are qualified Medicaid waiver payments, the IRS will treat these payments as difficulty of care payments that may be excluded from your gross income.
If the Medicaid payments are not qualified based on IRS criteria, you will need to report this income on your tax return.
More information is available from the IRS at: