Tax implications of caring for elderly parent

Discussion in 'Tax' started by Samantha Hill - take out TRASH to reply, Mar 4, 2008.

  1. My sister doesn't have newsgroup access, so I am asking this for her.

    She is caring for my mother, who has early to mid stage Alzheimer's, in
    her home. My mom has some retirement and interest income and social
    security -- not sure how much, but she is neither poor nor rich -- and
    she pays my sister an amount of money that is categorized as room and
    board and another amount that is categorized as caregiving after my
    sister had to give up her job to help care for Mom -- doing her laundry,
    cleaning her room, personal care, taking care of her finances, preparing
    her meals, making sure she takes her medications properly, driving her
    wherever she wants or needs to go, arranging for and coordinating
    medical care, etc. -- all things that my mom no longer has the capacity
    to do for herself and that would her cost a ton more if she went to an
    assisted living center or had to hire an outside caregiver.

    Here are my questions:

    1. How do we determine what of this is legally income to my sister, what
    she has to pay self-employment tax on, what she has to file a Schedule C
    on, how many Schedule Cs she needs to file, etc.?

    2. Can my mom deduct any of the caregiver funds as a medical expense?
    She can get a letter from a doctor stating she has Alzheimer's.


    If there is a web site that has this information that you can refer me
    to so you don't have to repeat it here, I'd be glad to take the URL and
    read up on it on my own.

    Thanks very much!

    --
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    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
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    Samantha Hill - take out TRASH to reply, Mar 4, 2008
    #1
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  2. Samantha Hill - take out TRASH to reply

    dpb Guest

    Samantha Hill - take out TRASH to reply wrote:
    > My sister doesn't have newsgroup access, so I am asking this for her.
    >
    > She is caring for my mother, who has early to mid stage Alzheimer's, in
    > her home. My mom has some retirement and interest income and social
    > security -- not sure how much, but she is neither poor nor rich -- and
    > she pays my sister an amount of money that is categorized as room and
    > board and another amount that is categorized as caregiving ...

    ....
    > 1. How do we determine what of this is legally income to my sister,
    > what she has to pay self-employment tax on, what she has to file a
    > Schedule C on, how many Schedule Cs she needs to file, etc.?
    >
    > 2. Can my mom deduct any of the caregiver funds as a medical expense?
    > She can get a letter from a doctor stating she has Alzheimer's.
    >
    >
    > If there is a web site that has this information that you can refer me
    > to so you don't have to repeat it here, I'd be glad to take the URL and
    > read up on it on my own.


    I would recommend starting at the IRS w/ Pub 554, particularly sections
    on nursing and long-term care.

    In general, the medical help is qualified medical expense to your
    mother, the wages paid are income to your sister. "Nursing" services in
    this context do not have to be performed by trained nurse to qualify.

    My reading would be it might even be possible the room & board is
    qualified owing to the disability, but read carefully to see if that is
    qualified in the actual rules as only applying to actual nursing homes,
    etc., not in an unlicensed facility.

    The rest of it we've been thru w/ my mother (my condolences, it isn't
    easy) but she was in a nursing home after the (nonqualifying) assisted
    living was no longer an option.

    --

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    dpb, Mar 4, 2008
    #2
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  3. Samantha Hill - take out TRASH to reply

    dpb Guest

    Sorry, forgot the url...

    http://www.irs.gov/publications/p554/

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    dpb, Mar 4, 2008
    #3
  4. Samantha Hill - take out TRASH to reply

    dpb Guest

    dpb wrote:
    > Samantha Hill - take out TRASH to reply wrote:
    >> My sister doesn't have newsgroup access, so I am asking this for her.
    >>
    >> She is caring for my mother, who has early to mid stage Alzheimer's,
    >> in her home. ...

    > I would recommend starting at the IRS w/ Pub 554, particularly sections
    > on nursing and long-term care.

    ....

    On the treatment of the rent and all, need somebody else who knows that
    area -- there are lots of things about renting independent of the
    caregiving part that might (or might not, I "know nuttink" about that
    part) help as well.

    Besides other advice you're almost certain to receive here, this
    situation might well be worth a visit to the pro's over -- the whole
    senior caregiving thing including business details of the situation to
    have everything in place.

    --

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    dpb, Mar 4, 2008
    #4
  5. Samantha Hill - take out TRASH to reply

    Seth Guest

    In article <fqjoi7$o1q$>, dpb <> wrote:
    >Samantha Hill - take out TRASH to reply wrote:


    >> She is caring for my mother, who has early to mid stage Alzheimer's, in
    >> her home.


    >My reading would be it might even be possible the room & board is
    >qualified owing to the disability, but read carefully to see if that is
    >qualified in the actual rules as only applying to actual nursing homes,
    >etc., not in an unlicensed facility.


    Wouldn't they be "for the convenience of the employer"?

    Seth

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Seth, Mar 4, 2008
    #5
  6. Samantha Hill - take out TRASH to reply

    dpb Guest

    Seth wrote:
    > In article <fqjoi7$o1q$>, dpb <> wrote:
    >> Samantha Hill - take out TRASH to reply wrote:

    >
    >>> She is caring for my mother, who has early to mid stage Alzheimer's, in
    >>> her home.

    >
    >> My reading would be it might even be possible the room & board is
    >> qualified owing to the disability, but read carefully to see if that is
    >> qualified in the actual rules as only applying to actual nursing homes,
    >> etc., not in an unlicensed facility.

    >
    > Wouldn't they be "for the convenience of the employer"?


    Don't see that that is necessarily proscribed even if so and it isn't
    really clear that in a case such as this that it is the reason--it could
    have been the mother's home wasn't suitable; the daughter/sister's is.

    It's clear if the person has been deemed chronic by appropriate
    physician that cost of lodging and meals is allowable in a nursing home.
    While I can't find a firm parallel that specifically addresses the
    equivalent payments going to a private caretaker, I don't see a definite
    proscription, either. I suspect there's opinion/case on it given the
    prevalence of the situation of elderly parents needing care these days,
    but I would recommend more research before making the election.

    Clearly the nursing help is qualified; other than the rule/law may
    proscribe it, I see no real difference in the circumstance of paying for
    care from the nursing home vs paying in the case the daughter for
    similar (and probably better for less) care. It's just whether the
    private as opposed to public is allowed--again, I don't see an absolute
    one way or the other in Pub 554 as a resident isn't specifically
    addressed although some examples of remaining in one's own home are.

    I personally would be willing to argue that the election is for medical
    reasons, not personal. I might not win, but in the situation unless I
    found a definite ruling against I'd probably file making the claim and
    pay up if turned down.

    --

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    dpb, Mar 4, 2008
    #6
  7. dpb wrote:
    >
    > I would recommend starting at the IRS w/ Pub 554, particularly sections
    > on nursing and long-term care.
    >
    > In general, the medical help is qualified medical expense to your
    > mother, the wages paid are income to your sister. "Nursing" services in
    > this context do not have to be performed by trained nurse to qualify.



    Thank you SO MUCH!

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Samantha Hill - take out TRASH to reply, Mar 5, 2008
    #7
  8. dpb wrote:
    >
    > Don't see that that is necessarily proscribed even if so and it isn't
    > really clear that in a case such as this that it is the reason--it could
    > have been the mother's home wasn't suitable; the daughter/sister's is.



    My mom needed a place that was wheelchair- and walker-accessible, and
    the in-law setup at my sister's wasn't, so she just wouldn't use her
    walker. This meant that she would fall and just wait until someone came
    around to visit. So my sister and her family moved along with Mom to
    someplace where my mom has her own private living space equivalent to a
    bedroom and sitting room along with the run of the rest of the house,
    and this place is all wheelchair-accessible.

    She thinks she is in a nice board-and-care home and my sister and my
    teenaged niece are both lucky enough to have jobs working there. It has
    never struck her as strange that there are no other senior citizen-type
    people living there besides her, and most of the time she doesn't
    realize that my sister and her family live there, too. *chuckle*

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    Samantha Hill - take out TRASH to reply, Mar 5, 2008
    #8
  9. Samantha Hill - take out TRASH to reply

    dpb Guest

    Samantha Hill - take out TRASH to reply wrote:
    > dpb wrote:
    >>
    >> Don't see that that is necessarily proscribed even if so and it isn't
    >> really clear that in a case such as this that it is the reason--it
    >> could have been the mother's home wasn't suitable; the
    >> daughter/sister's is.

    >
    >
    > My mom needed a place that was wheelchair- and walker-accessible, and
    > the in-law setup at my sister's wasn't, ...
    > ...So my sister and her family moved along with Mom to
    > someplace where my mom has her own private living space equivalent to a
    > bedroom and sitting room along with the run of the rest of the house,
    > and this place is all wheelchair-accessible.

    ....

    With that circumstance I'd consider it medical and formalize the rental
    arrangemnt, etc. I would still recommend consulting w/ an expert in
    elder care but would feel no compunction this would be legitimate
    corollary, nothing approaching fraud. Hence, if it were audited, it
    might get rejected but I'd see no way they could make anything more than
    that out of it. Of course I'm not a professional, just comparing two
    forms of the same thing and there's nothing that says that tax law is
    necessarily rational... :(

    --

    --
    << ------------------------------------------------------- >>
    << The foregoing was not intended or written to be used, >>
    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
    << The Charter and the Guidelines for submitting posts >>
    << to this newsgroup as well as our anti-spamming policy >>
    << are at www.asktax.org. >>
    << Copyright (2007) - All rights reserved. >>
    << ------------------------------------------------------- >>
     
    dpb, Mar 6, 2008
    #9
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