Deductions & credits

After you enter the 1099-MISC, you will want to indicate that "This income is a Medicaid waiver payment that qualifies as a difficulty of care payment."  This will not include it as taxable income.  NOTE: TurboTax indicates that the income may be used to qualify for the Earned Income Tax Credit- if it does, make sure you DO NOT use this as income for the Earned Income Tax Credit because this is a reimbursement, not payment for services.