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Tax implications of caring for elderly parent

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.?

  1. 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!

Reply to
Samantha Hill - take out TRASH
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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.

Reply to
dpb

Sorry, forgot the url...

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Reply to
dpb

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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.

Reply to
dpb

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

Seth

Reply to
Seth

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.

Reply to
dpb

Thank you SO MUCH!

Reply to
Samantha Hill - take out TRASH

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*

Reply to
Samantha Hill - take out TRASH

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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... :(

Reply to
dpb

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