Yes, it does make a difference. Certain Medicaid waiver payments are treated as difficulty-of-care payments when received by an individual care provider for care of an eligible individual (whether related or unrelated) living in their home. These payments are excluded from gross income and shouldn't be included in your earned income. Does the care recipient live with you and your wife in your home? Please this Help article on this issue >> Qualified Medicaid waiver payments on a W-2 show as earned income for EIC.
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