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I know for a FACT that I read about this several months ago but now I can't find it. If a family member is the primary caregiver for an elderly person and gets paid for doing so, the caregiver may not be required to pay Self Employment Tax on their tax return. There were some stipulations (the person can't be in the business of caregiving or work as a paid caregiver for anyone else). But if the conditions are met, the family caregiver doesn't have to pay Medicare or Social Security taxes on amounts paid for being the caregiver. They are still required to pay Federal Income Tax, but not the Self Employment Tax (which is SS & Medicare taxes).

Does this ring a bell with anyone? Please advise! =)

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If a caregiver is the child who has brought her Mother into her home because that was the only avenue available to the family; and if the stepfather provides a stipend to help cover the costs of food, Depends, personal care products, etc., because the adult child NEEDS the financial help in order to provide the care, how in God's name could the IRS count this as income? It sure isn't a gift either because the caregiver doesn't have the freedom to run out to Bloomie's and use the funds to buy a pair of designer shoes (ha ha). This whole thing of caring for ones elderly parents is so much more complicated than it needs to be and I think it's because there are people out there who are afraid that some person might take advantage of the "system." (That privilege needs to be protected and kept safe and secure for the super wealthy in our country. Just ask a senator). I see firsthand how the home health care "industry" is changing by the minute in order to align their businesses so it can reap the rewards of Medicare funding. But the poor individual caregiver as is usual if one is not a part of the sufficiently upper middle income level/class is very lost at sea. What a country the US is turning into! This website is helpful but one can see the problems discussed here are just the virtual tip of the iceberg. What about the poor folks who come on to sites like this one? I see those people in my volunteer work. It's a sad picture and not enough of their plight gets talked about. BTW the media owned as it its by five or six huge conglomerates with their own agenda (protect profits at all costs is number one ) is more and more useless nowadays. Real investigative reporting was killed off. Sure there's the stuff on the Internet but there's so much crazy stuff mixed in with the real, no one knows what to count on as truth anymore. I've told my husband, get ready, I'm moving to a nice semi-socialist country where English is the second language. I could be really happy there and not have to worry about how to get the medical care I need while I'm breathing better air and probably eating healthier at a lower cost. That's the end of my rant for today! Great weekend everybody!
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Great reference, Debralee. And I would add that you should have a caregiver contract drawn up so that the payments are NOT treated as gifts in case Medicaid is needed within the five year look back period.
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If the amount being paid is $14,000 or less per year, I would take the position that the money being given was a gift. (After all, Medicaid does.)
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