The IRS recently changed its rules regarding family members who are paid through a waiver program to provide care for a developmentally disabled or elderly loved one. No longer will they have to pay federal tax on the money earned from the waiver, depending on their overall tax status.
As an example, a parent providing personal care and companion services for a child living with him or her, who receives payments through a Med Waiver program, would likely be exempt from federal tax on the amount paid to them through the Med Waiver program.
However, there may be other factors. Like many tax rules there are often other circumstances and complications. It’s safest to confirm your status with an appropriate professional.