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My Mom is now in a nursing home and her SS and pension go to her care, and Medicaid pays the balance. When we applied for Medicaid they told us to stop having Federal tax taken out of her pension. So when I just did her taxes, now it came out that she has to pay tax! This doesn't seem right for someone with zero assets on Medicaid. Is there a different way I should be filing this? Thanks

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Thanks for all your responses. @cmagnum, trust me, I am not confusing Medicare and Medicaid. She is on Medicare as her primary healthcare, but on Medicaid for her nursing home expense. Her pension and SS is $3500/mo which the NH takes (Medicaid pays the balance 6000 balance) and she gets to keep $50/mo. So technically she is “dirt poor”, although her "income" is $42K.
@Carlacb, I've used the short firm 1040A since we sold her house 8 years ago, so she may have to itemize deductions again to claim the NH as medical expenses. Hadn’t thought of that. I definitely will have our CPA advise us on Moms taxes this year. It didn’t seem right that she should owe over $1000 this year, with nothing to pay it with. Thanks.
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A large portion of your mom's income can be deducted under the category "medical expenses". It may be quite worthwhile to get a well qualified cos to do her taxes this year. Next year you can "follow the lines" so to speak.
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My Mom received received SS and a small pension totaling about 20k a year. She was told shortly after my Dads death in 2006 that she no longer needed to pay taxes because about 18k of her total income is SS. I would talk to a tax preparer. If Medicaid is paying for her NH and taking her SS to offset part of the cost, your Mom has no money to pay taxes.
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I don't know how she could have a tax liability. Aren't all of the nursing home costs deductible as medical expenses?
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People often get Medicaid and Medicare confused. Have you confused the two? You have to be dirt poor to be on Medicaid.
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I think that you need to see a CPA for if you qualify for Medicaid one would not have enough income to be taxable, I think.
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Rocketjcat, I am moving your post closer to the front page. Hopefully a caregiver who is familiar with Federal taxes regarding income taxes can answer your question.
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