Having a formal agreement about caregiving in exchange for the family homestead or some other deferred benefit, might be construed as “taxable compensation” as evidenced by the 2003 federal court decision in United States vs. Dieter. Mary Dieter’s receipt of the home was treated as “taxable compensation for services rendered.” In another circumstance, if the care recipient goes on Medicaid, such an exchange could be considered an illegal divestiture. Understand the laws and plan accordingly.
In conclusion, if you don’t already, with a few adjustments, you may be able to qualify for some of the tax advantages listed in this article depending on your income level and situation. Furthermore, the state in which you live may offer benefits as well. Learn what you can and consult a qualified professional for planning and preparing your taxes.
June Schroeder is a Certified Financial Planner (CFP®) with Liberty Financial Group in Wisconsin, and has been working in financial services since 1979. Schroeder is also an RN, having received her degree from UW-Milwaukee in 1969. She served for 7 years as the Director of Economic Security for the Wisconsin Nurses Association, making her uniquely qualified for her role as a certified financial planner. She has written extensively for local publications as well as CNBC.COM. She has taught courses and lectured nationally on financial planning for universities and colleges.