I've read this a couple of times in the past. If you look at paragraph two, you'll notice that the IRS labels Medicaid waiver payments as difficulty of care payments excludable from gross income.

My client qualifies for this because his two clients are full time residents at his home.

The question is with the supplemental payments for taking his clients to the museum, parks, and other activities. These payments were reported on a 1099 separately from his other payments.

Thanks