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The money I receive from caring for my parents in my home is counted as income to me. I should be able to deduct some expenses whereas not all the money I receive is "profit" and should not be subject to income tax, much like a business is allowed to take deductions. I have heard that medicaid has a "Roof, Utility and Food" (RUF) allowance that is used by assisted living facilities. Is this something I can also us as a standard deduction? Where can I find how much that amount is?

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OK, I would go over this with a tax professional (at least for the first year), they should know exactly how to determine what you can use as legitimate deductions. It is well worth the expense to be certain that you get it right (I'm not in the USA and the rules are not the same, but the tax man is just as finicky no matter where we live😉).
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Yes, the agreement was set up with an attorney. He set the amount for us to be paid at a conservative rate based on assisted living centers in our area. My understanding is that we will be treated as an independent contractor and receive a 1099 for the amount we are paid at the end of the year. I know some will set themselves up as an employee and have their parent pay for part of their social security and tax withholdings. We have not wanted to go this route.

It was also the attorney who said medicaid has an allowance for Roof, Utilities and Food used by assisted living centers referred to as RUF. This amount is the cost medicaid recognizes as the cost for these services in caring for an individual. I believe the cost is somewhere around $648/month. I am hoping that this may be a simple way to deduct our expenses from the money we receive in calculating how much we need to pay taxes on. I have heard others will claim a percentage of their house payments and utilities and food. I was hoping not to keep track of individual receipts. We are also keeping a log of milage when we are transporting them to appointments and errands. We will use the milage as a deduction.
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AARP sets up offices for volunteers to help with IRS filings. Might be a good resource to ask your questions.
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You can't be both an employee and an independent contractor/self employed. Did you set up your caregiver contract with the help of an attorney?
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Dear MisterB,

I wonder if you can check with an accountant or HRBlock or an elder law attorney. Or calling Medicaid directly.

I'm so sorry, I hope others will have more experience in this situation.
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