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I have recently cashed a couple of my mother's CDs to pay for her memory care for a few more months. She will have to apply for Medicaid for long term care before she receives the 1099s to report the interest on her tax return.


When applying for Medicaid, she can only have $2,000. She can't hold back funds to pay the tax due. Do I have to pay the tax from my funds?


I guess I should have cashed the CDs last year. I hired an elder law attorney last year that did nothing to advise me. I had to let her go.


Thanks for any experience in this matter.

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I would check if Mom even has to pay taxes. Really, was the interest that much. You only pay a % of that in taxes. 5 yrs ago my Mom brought in monthly $1700, 1500 of that was SS. She had received a letter a few years earlier from IRS that she no longer needed to pay taxes because most of her income was SS. There is a cap concerning xtra income. Your Mom may not even meet that even with the interest. I would talk to a tax acct to see what they say.
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The professional you need to talk to is a CPA or a Medicaid Planner for your mother's state of residence. Attorneys don't advise on financial matters, unless they are Tax Attorneys. Just like a CPA would be giving you legal advice.
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Former IRS employee here and I suggest you make an Estimated Tax Payment now for the taxes you anticipate she will owe. Use Form 1040 ES and use that to send in the payment now. You don't have to wait until next April 25th to make the payment and potentially make her ineligible now for Medicaid. If you overpay the tax now she'll get a refund next year, just like anybody else
Do not pay her taxes from your own funds, there's just no need to do that.
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