I am looking for a little clarification on Medicaid Waiver Payments. This recently came to my attention and I have read a lot of information and came out with more questions than I started with. I have a client that takes care of her mother in their home. I asked her and she said she is paid for nonmedical support services by Caresource. I was not aware of a waiver for this type of service so I want to amend the returns if she is entitled to exclude the income. 

Some years she only cared for mom and other years she had other clients as well that she traveled to their house. I am trying to figure out how I determine if she is really entitled to exclude the income. Everything says that the income should not have been reported if Caresource knew it qualified and they knew she was caring for mom in the home so that is why I am concerned she may not qualify for some reason. I know I can only exclude payments for her mom and not other clients. 

I also see that it is excluded from federal income but you still pay social security and medicare taxes on it if on a W2. If I exclude a 1099 which is on Schedule C those taxes will not be paid. 

Can she still claim mom as a dependent?

I have to act fast to get 2015 amended under the wire. I appreciate any help you can give. Thanks!