Can Mom get a tax deduction for payment to Daughter for home care?

Sone tax deductions are allowed in facilities that provide AL, MC, or NC, calculated between 30 and 45%. The deductions are based on the type of facility and the medical portion of care. I assume you are not a licensed caregiver operating under a doctor. Your care would be considered custodial care which does not qualify.

She could as long as she reported those monies as earnings for you. She paid you and you had earnings for the year. You would need to report the earnings, probably as contract labor. In the end, she would get a deduction and you'd be paying tax.

If you aren't reporting the income on your own taxes, it's considered being paid 'under the table' to avoid taxes. If you do report it and pay taxes on it, then by all means give her the deduction.

Before I mentioned taxing income may depend on if your being paid as a caregiver or its rent. Just read that even a child caregiver being paid to care for a parent needs to pay taxes on that money. Does not have to pay Medicare and SS taxes.

If you count the money as rent it is not taxable

"An amount of money that your parents give you to offset their expenses isn't taxable to you. This amount is treated as support provided by your parents in determining whether your parents are your dependents."

So better to have it as rent then caring for a parent.

You need to consult a tax person about this. I think she can if she itemizes her deductions. However, it may not make a difference if her standard deduction is larger than the itemized total.

What I do know is that what your mom claims as payment to you will have to be reported by you as income on your tax returns. Your mom will need to issue you a 1099-Misc so that you can file it.

This is a good question. You can make deductions for daycare for a child but I think in that instance the Daycare has a tax number you use. I guess it needs to be established if your being paid to care for her or she is paying to live there.

I guess your Mom makes above $14,250 her SS income if she still needs to pay income tax.

"For 2022, people over 65, single, and who have more than $14,250 in income outside of their social security income will need to file a tax return. Seniors who are married will need to file if their non-social security income is over $28,700."

Geez, but the gifts will make someone ineligible for medicaid if needed.

Always, always, Always visit with an elder law attorney to learn about responsibilities associated with being the employer of a caregiver.

Yearly gifts mess up Medicaid qualification!

The short answer to your question is "YES". The longer answer is that in order for her to claim the expense, she must itemize her deductions. In addition, her itemized deductions must be more than what the standard deduction currently is. That might not be too hard to do if she lives in one of the higher tax property tax states and/or higher state tax states. Depending upon how much out-of-pocket your Mom pays for medical, she might not have a sizeable deduction to make it worthwhile for her and you.

If she claims the amount of money that she gives to you as an expense, then you will need to claim it as income on your return.

Either she or you will/should pay all the other pieces to make it legitimate and especially if she pays you more than $2,300/year. She could pay the "pieces" as an employer or you could pay the pieces as an independent contractor.

If you don't want to consult a CPA, you could get a copy of TurboTax for Home and Business or one of the Tax programs that will allow you to file a Schedule C for yourself. Start putting in all the numbers, using last years figures, then add to the form for the 2 scenarios, one where you are a contractor and one where you are an employee of your Mom. Make sure you enter all her medical expenses for last year, even though she took the standard deduction.

That will give you a rough idea of whether it will be worth the effort or not. I am not a CPA, however, I will tell you that I find taxes more fun than most people. If you are like me and find taxes "fun", I would suggest that you forecast how this is going to affect both your Mom's and your tax return before making the final decision.

Warning: if your Mom gave you over $15,000 in 2021, you are over the gift tax exclusion, and your Mom was supposed to pay a tax on the "gift". However, there are ways to not pay this tax now. So before you make a final decision, I would run it by a CPA. Starting your own business is easy. Its all the other stuff that you have to do that takes additional vigilance...and if you don't take the time to do the pieces correctly, you could trigger a visit from the IRS and they will figure out the payment and potentially, penalties. Ignorance is not an excuse for not paying your taxes....and don't forget to factor in the state income tax too, if you have one.

bubbaclemson123: As you state further down this thread that your mother files her federal income tax using the STANDARD deduction, in order to claim (if even possible) health care costs, she would have to file using the ITEMIZED deduction. It's best to pose your question to a certified public accountant as a lot of criteria have to be met/answered for your mother regarding your question.

Check with a certified public accountant (CPA) or a tax preparer with CPA credentials.

It is unlikely but not impossible that she would get any benefit from the deduction.

It depends:

Do her expenses qualify?
https://www.irs.gov/publications/p502#en_US_2021_publink1000178975
Note the requirements for medical certification and plan of care.

Does she already itemize deductions or does she use the standard deduction? If all of her medical expenses exceed 7.5% of her income she can deduct the excess with her other itemized deductions, including her mortgage interest, charitable donations, and state taxes. If the standard deduction is better than itemizing, there is no benefit.

Also check to make all paperwork is in order.

Is she conforming with payroll tax requirements? When one submits the deduction claim, the IRS requires proof so that they can verify that appropriate SS, Medicare, etc. are collected.

Are you claiming the income on your taxes? The IRS will follow the money to make sure that you are also paying required taxes. Reimbursements for expenses (rent, groceries, utilities, etc.) may be treated differently than compensation for services.

You can consult an appropriate professional for details. If Medicaid is a possibility in the future, make sure that you are well informed about what a personal care contract is.

Is she paying you legally by withholding taxes, social security, etc? Do you have a care contract with mom? Best visit with an elder law attorney.

Agingcare.com/articles/personal-care-agreements-compensate-family-caregivers-181562.htm

Your profile says your mother is 100 years old. Is her pension and any other interest income enough to warrant her filing? If not, then a tax deduction won't be of any benefit to her. Maybe a simple question for an accountant to easily answer since we don't know anything about her total financial situation.

Is she withholding taxes and social secccurity from your checks? You need to consult a CPA to get professional information and assistance.

Maybe--maybe not. This is one situation where a quick trip to an attorney (tax specialist) would not go amiss.