I have a personal service contact with a family member and I received a lump some of money to care for all her needs. She is in a nursing home but still needs a lot of care such as appts and book keeping etc. I can not get a clear answer on whether or not I need to claim this money on taxes as there will be no 1099 or w2 since I received it via cashiers check. 1. Do I need to report on my taxes?2. If I have to claim it on taxes, Can I purchase a new vehicle and write it off to reduce tax burden? My car is having issues and I need a reliable car to help take care of this family member and work.Thank you!!!
You don't give us much context, like how much is the lump sum, how long a time span it is meant to cover for services rendered, what state you live in, how old is the family member and what level of care she is receiving?
If she's on Medicaid, she cannot give you this money without endangering her qualification status. Even if she currently isn't on Medicaid, this type of exchange may delay or disqualify her if she needs it. In most states the Medicaid financial application "look back" period is 5 years.
Again, because of so few details plus the fact that we aren't financial professionas, and have no accountability if we give you bad advice, please talk to a CPA or elder law attorney.
This could all work out but you need the big picture. A certified elder attorney would be my choice of professional to begin with. Is there a POA for this elder?
Let is know what you find out. We learn from one another.