@Hal_Al The original answer is outdated ...
There was a recent Tax Court case that ruled that it DOES qualify for the Earned Income Credit. Although I may have missed it, so far I have not seen the IRS respond to that court case.
https://www.ustaxcourt.gov/UstcInOp/OpinionViewer.aspx?ID=11863
EDIT: The Instructions to Form 1040 now state that you report it as taxable income on Line 1, then 'back it out' on Line 8. That way, that income will qualify for the Earned Income Credit. As for whether TurboTax is set up for that, I have no idea.
Certain Medicaid waiver payments you received for caring for someone living in your home with you may be nontaxable. If these payments were reported to you in box 1 of Form(s) W-2, include the amount on Form 1040 or 1040-SR, line 1. Also, include on line 1 any Medicaid waiver payments you received that you choose to include in earned income for purposes of claiming a credit or other tax benefit, even if you did not receive a Form W-2 reporting these payments. On line 8, subtract the nontaxable amount of the payments from any income on line 8 and enter the result. If the result is less than zero, enter it in parentheses. Enter “Notice 2014-7” and the nontaxable amount on the dotted line next to line 8. For more information about these payments, see Pub. 525.
