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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!!!

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Understand that you have more than one gov entity to keep in mind. IRS and Medicaid. What might be legal for IRS might leave your elder vulnerable should they ever need Medicaid.

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.
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Reply to 97yroldmom
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I would consult whomever does your taxes for you. This is a legal financial question you can't afford to be wrong about for both federal and state taxes. Don't rely on the opinions of strangers when you need expert advice. Wishing you the best.
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Reply to AlvaDeer
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Retired IRS tax collector answering here.....you are employed and getting paid for your services no matter if the funds came to you as cash, check, or cashier's check. Who in the world did you consult that couldn't tell you that? You probably should be given a 1099 at the end of the year, and whoever was in charge of providing the funds should do that. It sounds like you are self employed and therefore are responsible for reporting your income (1099 or not) and paying your own income tax and Social Security tax. I suggest you get a professional tax preparer to advise you on the appropriate expenses you might claim relating to your self employment income.
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Reply to vegaslady
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The better forum for financial questions is bogleheads.org

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.
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Reply to Geaton777
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