It depends on the type of payments you received to care for your sister. Some payments to provide in-home support services for a disabled person are excludable from gross income and not included in earned income. For a detailed discussion, including numerous examples, please see this IRS webpage: Certain Medicaid Waiver Payments May Be Excludable From Income.
Note: If Qualified Medicaid Waiver payments were reported to you on a Form W-2, please see the FAQ below.
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