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he has in savings is not taken by Medicaid and it is not considered a gift, now that we have applied for Medicaid assistance. We live in Florida and an attorney stated that I did not have to pay taxes (Federal/Social Security/Medicaid) on the 100K. Is this true? And if i do have to pay taxes (which ones), can the taxes be paid during the 3 years that the contract is for, or it has to be paid in a lump sum all at once? Thank you

Ralph, why would you feel the attorney had to explain the tax issue?  Some may understand it but not to the extent that a tax accountant would.  And vice versa:  would you expect to get legal advice from an accountant?

The attorney is thinking on your behalf, recommending the best option if he doesn't feel it's appropriate to be providing tax advice.

Reporting him to the BBB would be an insult to and disrespectful of the attorney, and probably a waste of time b/c he's NOT a tax person.
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Unfortunately, the lawyer we hired to do the Service Contract agreement stated that I needed to talk with an accountant. Go figure, so now to an accountant, but I will report the lawyer to the better business bureau because he did not explain the tax issue. thank for your info.
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gladimhere Feb 27, 2020
Is this an elder law attorney?
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Disclaimer - I'm an idiot losing truckloads of money in the stock market every day that has no idea what I'm talking about.

Family members paid to be caregivers are treated differently than non family members. You should not have to pay SS AKA self employment tax. You are not an employee or self employed. But you should be subject to income tax.

Here's the IRS guidance.

https://www.irs.gov/businesses/small-businesses-self-employed/family-caregivers-and-self-employment-tax

I am confused about something. You said that this contract is for 3 years but you already applied for medicaid. You should have to spend that all down to 2K before qualifying for medicaid. So you are applying for medicaid now to take effect in 3 years?

There is another way to shelter assets. If there's a house, pour the money into that. Buy a Telsa Power Roof, that's $40K right there. While not as good as cash, it adds value to the house that can be pulled out when the house is sold. In many states, as long as the house is not probated, it will not be subject to MERP. In many states a house can be transferred on death with paperwork signed even shortly before death. There is no lookback period for transfer on death.
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gladimhere Feb 27, 2020
All of the examples provided on the IRS site is for situation where the caregiver is paid through government programs. This caregiver will be paid by dad, not the government.
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It is the person MAKING a gift who is taxed.
This sounds more like you are hired on. That means that you will declare this as INCOME, not as a gift. So you will be taxed if that is the case. If it is a gift, your Dad will not get medicaid, I don't think. There is a lookback. Most states a five year one. You cannot gift a large amount of money and then request medicaid. I am guessing that Dad will live with you, and you will be paid by Dad; but I doubt he can get medicaid if that is the case. The lawyer who is working on this should be able to answer your questions; when it comes to legal issues it varies state to state and contract to contract, so the Lawyer is the best person to ask.
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