NH has asked me to have my dad's pension check companies stop removing taxes before applying for Medicaid - is this the correct process?

Glad, I actually wasn’t trying to fight the system, I was just really confused since stopping the tax withholding on her pension caused her to owe $1200 in taxes when I did them the “old” short form way. Thankfully our CPA showed me the error of my ways and it washed out to zero. I was just trying to reassure the OP that this all works out correctly.

Even if there was a refund it would still go to Medicaid for reimbursement. A measly refund is not worth the effort to fight the system, IMO.

Yes, when I applied for Moms Medicaid, the Medicaid caseworker also told me to have no taxes withheld from her pension check. This maximizes the amount the NH will get. I was concerned that it could affect her measily income tax refund. But when our cpa did her taxes this year he used the long form so he could claim the $40K, her portion of the NH bill, as an medical expense so she owed nothing, and got no refund.

If dad is in nursing home it has been prescribed by his doc. The cost would be deductible, so dad would have no income. Everything would be deducted as a medical expense. No taxes owed. But, I would check with dad's CPA.