I have a financial question about taxes. Can I claim this on my tax return?

You say the sale of her home resulted in a capital LOSS? That’s interesting. It would be great if you could use that capital loss on your taxes. That MIGHT be possible if she were your dependent that year. She MIGHT be your dependent if, for example, you provided her with more than half of her financial support (including your labor at fair market value for cooking, cleaning and such).

Like everyone else says, see an elder law accountant.

It depends SOLELY on the social security number that is on the account. It should be your mother's number. Not sure why you would want to declare this interest as income on your tax return - if you are already paying taxes - rather than file a simple EZ form for your Mom and avoid taxes altogether??? Unless there was a huge capital gain on the sale of her house, your Mom should be covered by the home owner exemption ($250,000, I believe, if she didn't have a living spouse). BTW, be sure to keep ALL receipts for caregivers, disposable panties, transportation to Doctors, etc. These are all deductible off of your Mom's future returns. I sold my sister's house when she moved in with me (very early onset Alzheimers) and invested the proceeds in her name (with someone who handles my own investments). Her investments generated money that we offset in total with these expenses...so she paid no tax. My sister passed away 3 months ago and even though she had at home care 12-14 hours a day, 7 days a week, we were able to preserve virtually all of her house proceeds nearly 4 years later, when she passed. You don't want her house proceeds to be sitting in a bank account for what may be years. Rather, you need something LIQUID that you can access when you need it to pay her caregiver bills. JUST MY OPINION; I am not a certified financial advisor.
P.S. We were NEVER going to file for Medicaid coverage for her - we knew what Medicaid "beds" in our area were like versus self-pay - if we ever needed to place her in memory care. IF You want to keep Medicaid as an option, you should really consult with an "elder law" attorney on how to structure her accounts so as to maximize her benefits.

I suggest that you go to a accountant that specializes in taxes. It is possible that she could be claimed as a dependent on your return. Therefore she could have been of benefit to your taxes in 2020. The house that she sold, could qualify for a home exemption, and your mother may or may not have to pay taxes on the gain. Either way, the sale of the house should be reported to the IRS. The money that is in the joint account, you are correct, assuming that you got a 1099-INT form for the interest, it doesn’t matter who pays taxes on the money, however, it needs to be on either yours, your Mom, or both returns. The IRS may come looking if the amount of interest generated is over the minimum income that requires filing a tax return.

The free tax services will help you file taxes. However, I suggest that you go to a accountant or CPA so that you can get advice on both your mom’s taxes and your taxes to see if the fact that your Mom is living with you, can help you with your tax obligations not only for this past year, but also for future years.

CSimmers: Additionally, she should have received any tax documents, i.e. Form 1099 and others that should show reportable income.

CSimmers: This query should be posed to your Certified Public Accountant. However, if there were Capital Gains on the sale of HER home, then SHE must file tax returns (federal and state). Then SHE will report the interest income on HER returns, bearing in mind interest income under a certain value does not have to be reported. See IRS.gov for that dollar amount.

Get yourself an Elder Law Attorney so that you don't end up in any IRS trouble.

If your mom has dementia, she can’t be driving or gambling.
That makes her “gambling problem,” a moot issue.
It sounds like your looking for an excuse to co-mingle her money with yours, imo.
My now deceased mother had dementia, needed a wheel chair and oxygen.
I was her POA, then conservator/trustee.
I accessed her account to pay assisted living bills.
I sold her home and the money went into HER account that was a “trust.”
I would never think to co-mingle her money with mine.
No probate lawyer will condone that.
You need a probate lawyer because your mom never legally assigned anyone, and now it needs to be decided by a probate judge.
The probate judge got involved only when greedy family wanted her moved home.
Her lawyer called for the hearing, because he knew she needed (2) aides that long term care would not cover.
She gets a lawyer too, fyi.
The court will assign a GAL, since she has dementia.
Good luck.
What a mess.

If she has capital gains on the sale of the house, then she has to file a tax return. The fact that the money is in a joint account now is irrelevant. The tax is on the sale of the property that I assume wasn't in your name.

CSimmers, w/o denigrating the advice of anyone else, this is definitely a question for IRS, or a tax accountant.   I've read your post 3 times and still couldn't provide an answer which I think would adequately address your situation.

Since she had a special event in 2021 (the sale of her house), you should have an accountant file taxes for her this year. You were not the owner of the house. It shouldn't go on your return. An accountant can also advise you on how to save tax dollars if there were capital gains on appreciated value of the house.

I think the best thing you can do is talk to an CPA who specializes in eldcare and to an certificed eldercare attorney who can talk to you about DPoA (which if Mom has been dx'd with dementia you may not be able to secure at this time)and point out the navigation points of Medicaid should you need to avail yourself of it's benefits for Mom's care in the future. You definitely don't want her funds in a joint checking account with your name on it.

Good luck on this journey

Seems you would have to claim your half of the money as taxable income unless it is low enough to be claimed as a "gift" from your mom to you.

There is information on IRS.gov to assist you in determining whether you can claim your mother as a dependent. https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent This year may not be the year to do that.

The sale of the home will generate a Form 1099-S. This income is reportable on a return if it's greater than the filing requirement income over $14,250. The sale may not be taxable, but, it is reportable. Also, because of the pandemic payouts, it may be beneficial to file a return for your mother, https://www.irs.gov/about-irs/filing-a-2020-tax-return-even-if-you-dont-have-to-could-put-money-in-your-pocket

VITA/TCE are programs sponsored by the IRS that provide free tax services for taxpayers. The volunteers are certified and are a wonderful resource. TCE is generally supported by AARP; TCE specializes in tax issues of the elderly. To find additional information and a site near you, go to https://www.irs.gov/individuals/free-tax-return-preparation-for-qualifying-taxpayers

Your local Area Agency on Aging may have legal and tax help freely available to you, as well as Adult day care and respite care help and information.

CSimmers,

Please know that Alva is not trying to make you feel stupid. Information on the proper process should be readily available, but it is not.

She is pointing out that you and your mother have created a situation that could and likely will bite you hard in the backside. You did not do so out of stupidity, but because you and your Mum do not know the ramifications of co-mingling funds.

Now you are saying she is no longer competent to make decisions, which opens a whole new set of problems as she did not assign POA when she was competent.

You are not the first, nor the last to get yourself into a situation that will have significant ramifications down the road, especially as you said Mum also paid to have an addition built on your home.

What can happen? Medicaid has a 5 year look back period. If Mum needs Medicaid services, they will look at all her financial transactions for the previous 5 years. If they flag any of them, such as funds being put in to a joint account, additions being build ona house she does not own, there will be a spend down period, where they do not cover the costs of service.

If you could turn back time, Mum should have assigned your POA over finances and healthcare when Dad died. The funds from the sale of the house should be in an account in her name only that you can write cheques off of as POA. You could limit her access to the funds to limit her ability to gamble.

So what do you do now? Document everything, every penny into and out of the joint account. Find out from your State's Medicaid Office their guidelines and ask how to fix this situation. Talk to a CPA Tax Specialist about Mum's taxes and the interest. Talk to an Eldercare Attorney about next steps. You may have to apply for guardianship.

What kind of interest is she getting? I got $18 on my checking acct in interest. We closed our savings account because we were getting hardly anything.

If all your Mom receives is SS, I doubt the interest on that account will take Mom over the 14,250 listed below. There is no need to file. My Mom received 1500 a month in SS and 200 a month in pension. She did not have to file because that pension did not take her over the 14k listed nor did any interest she incurred.

"If you are at least 65, unmarried, and receive $14,250 or more in non-exempt income in addition to your Social Security benefits, you typically must file a federal income tax return (tax year 2021).

• Regardless of your filing status, if the sum of half your Social Security plus your adjusted gross income plus your tax-exempt interest and dividends exceeds $25,000 (or $32,000 if you are married filing jointly), then a portion of your Social Security benefits are included in gross income."

I would call the IRS and ask. Depending on the amount, it may be tax free.

My dad sold a property and we set it up for him to finance the balance. He didn't have to claim the interest income because it didn't put him over a certain additional income bracket.

You can have a joint account, you just don't want to co-mingle your money with moms. That's when it becomes an issue for Medicaid. Your assets won't be counted on the application.

If you are concerned about this, you can get the application and review it and get everything clarified and set up according to the application.

If mom isn't able to understand what a DPOA and DMCPOA are in the moment of signing, your only other option is guardianship, mom's money would pay for this. However, a doctor that says she needs more care, facility care, carries a lot of weight for moving someone into a facility.

If her symptoms are new, she should be checked for a UTI. They can make dementia symptoms way worse.

Best of luck getting this sorted.

Oh, oh. I think you need expert advice here. Your Mother-in-law's money from sale of her home should be in HER name even if you are POA and can pay her bills on it, even if you are POD as beneficiary. It should not be in both your names. And whomever is the taxpayer ID on that account? Well that is that person's account. The proceeds of the sale of the home, if capital gains, if over a certain amount, if not fitting the IRS rules for exempt, needs reporting. And heaven FORBID you claim your MIL assets as yours on any legal paper or with any legal entity.
You need to get yourself right now to a GOOD CPA and find out what to do herre. This should NOT be a joint account. These are your Mother's assets. You are lacking in a lot of information that could have SERIOUS LEGAL and FINANCIAL repercussions for both YOU and you Mom.

If the account that earned interest is a joint account, the interest would have been reported under the ss number of whoever is listed first on the account. So, if your mother is listed first, even if you put the interest on your tax return, the IRS couldn't "know" that this was the same interest reported under your mother's name and ss number. Are you claiming your mother as a dependent on your tax return? If not, and if you did not get stimulus payments for her, it would be well worthwhile filing taxes for her for 2020 and 2021 because she is entitled to the payments ("recovery rebate credit"). If you use tax prep software, there's a place where it asks if the payments have been received and you'd check "no" for your mother. Here's some information from the IRS about how "non filers" can get the payments. https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here