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I live at my mother's home and she gives me an allowance to take care of all of my expenses. I am a single woman, have no outside job, or income, and take care of all of my mom's needs (appointments, food preparation, grocery shopping, etc.) Am I considered a "caregiver" in this situation and need to report the money she gives me as taxable income?

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The tax people don't know the legalities of gifting under Medicaid. Tax people will.tell you that yearly gifts are not taxable up to 17K this year. But these gifts are not waived by Medicaid.

They need a care agreement that is legal in Medicaid's eyes and will meet their scrutiny. The time to learn about the gifting rules is now, not when Medicaid has denied benefits because of giving daughter money for her own bills. What if mom has a stroke and needs a nursing home tomorrow. If mom does not have assets to pay those costs out of pocket for five years then she will be penalized an amount equal to the gifted amount. You do not need the extra stress of questions of her qualifying when the care is needed.

It would be nice if this was none of the government's business, but the government and me and everyone on this site will be the one's paying for mom's care. It is our business, why should I be taxed to pay for mom's care when she gave away her assets?
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I'd have thought no, but there is the caveat that it's either caregiver's income, to be declared as such, or she is giving you the money and it's therefore gifting within Medicaid's sense of the word. Could that become an issue?

Anyway, if it were me I'd ring up the tax people and ask.
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AQUAINST1 Mar 2023
Do NOT ask ‘the tax people’ Aka IRS.

a) They won’t know, and b) their stock answer will be ‘yes, it’s taxable to you’.

GIFT is the word.
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No! Your her daughter. What she gives you and what you do for her is nobodies business, especially the govt. I’m sure it’s not a great amt of money so it wouldn’t raise red flags.
And don’t get attys involved. They need to make a living and your money is as good as any bodies.
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See an elder law attorney before you get mom disqualified from Medicaid coverage if she should ever need it. Make it legal.
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erin62: You need to pose your question to a certified public accountant.
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It probably depends on how much money she gives you. Look up what is considered the highest amount you can "earn" annually without having to pay taxes. My guess is that it is better to pay than be charged with tax evasion.
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JacquieL Mar 2023
We posed this question to our Elder Care Attorney. She can "gift" you up to $500.00 per month without it effecting Medicaid. Keep spending for food, her clothing, meds separate from the $500.00.
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All these answers have tidbits of valuable information. The long and short of taxable money is your particular status. How much do you earn? Do you have multiple sources or only the one? Did you pay taxes before? Are you (separately from others) eligible for assistance or benefits? Is your mother? I agree with one person here about taking care of yourself (for the future). IF you are going to continue though, you should have a notorized caregiver agreement. You can get a copy off the web. Fill it out, notorize it and it will stand as a legal binding document. If your mother can't do the tax part for you...you can always do an estimated tax form with the IRS.
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No it is not taxable to you; nir is it a tax deduction for your Mom.
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You can claim taxes and with low income you may not need to pay if you are at a certain income. Filing helps with keeping the retirement record for Social Security far in the future. My record started as a teen. Did you see if you are eligible for medical insurance while you earn below poverty level? Can you qualify for SNAP?
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For tax purposes you can give someone $16,000 before they would have to pay taxes on it.
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patpaul Mar 2023
Helpful info. Thank You
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erin62, welcome to the forum. It is good that your Mom is able to pay you for taking care of her. But I worry about your financial future.

I wonder if the pay your Mom is paying you could be used for a caregiver to come in and take care of her.

That way you can go to work outside of the house depending on your work history. If you came from past employment where you had received a good salary, paid vacation days, paid sick days, 401(k) benefits, stock options [depending on the company], promotions, etc. Just something to think about. It is expensive getting older.
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NeedHelpWithMom Mar 2023
Exactly, is the trade off worth it? Plus, if her mom needs placing through Medicaid, it will affect that as well.
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yes, it is taxable. you need to set up appropriate paperwork for her to report what she paid and for you to report on your tax forms. contact a cpa or atty to get you on right track.
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Yes. She (your mom) will need to report it and you will need to claim it. Medicare, and SS needs to be paid from it. See your tax professional regarding it and how 1099's need to be completed for your state.
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I would take this question to an accountant or consider seeing an elder law attorney to work out a care contract. Either should be able to give you peace on this subject. I myself would choose the attorney. If you are your Mom's POA (you SHOULD be) then her funds pay for that visit. And you can get other things worked out like the POA, the record keeping needed by you as her fiduciary legally, and a whole lot more. You also need information how any payment to you must not seem like "gifting" from her. There may come a time when your Mom needs placement, but has not adequate funds for payment; she may need application to medicaid and you would have a "lookback" on her expenditure.
You can get some good information from a Forum like this, but it helps to see a professional when you need professional advice where you cannot afford to go wrong.
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I guess it depends on the $$ amount but it would probably be of benefit for both of you to set this up with a formal employment agreement, that way you are paying something into SS and she will be covered if she ever needs to apply for medicaid. Setting this all up can be complicated so spend the money to hire someone who knows what they are doing tax wise and also understands medicaid.
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