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My first question. Nice to find a place to ask others what to do!


Here's a little background info. My father now 90, had a Hemorrhagic stroke 14 months ago, went to a SNF after being in the hospital for almost a month and then home to hospice. He graduated from Hospice but he's now disabled and depends and on my 92 yr old mom who doesn't drive and has some dementia also. We live in Sonoma County and he's a Vet. I'm married and we live in seperate homes just a few miles from each other.


I'm older and am having a hard time finding work in my area if IT in wine country and have bills to pay and my emergency savings are draining. My parents have been giving me some $ for helping them and say they don't know what they'd do without me. They say this is also for doing things over the years to help them as they've never given me anything before and noted they've helped with a sister and her family and given her much more so they wanted to show their appreciation in helping them. I never asked for $ or suggested it. I care for them because it's the right thing to do and I work almost every day trying to maneuver through all the various programs available, reading and finding resources takes a huge amount of time! I'm their main support conduit and this gets complex, at least in my mind as does driving them.


I don't believe any of the $ they've given me is or should be taxable as they've said it was of their own doing.


This is where I need help!


After a recent visit to the VA clinic and speaking to a social worker it was suggested they write a contract up for my efforts that legitimizes monthly payment to me and then the VA can deduct that payment from their income allowing the VA to pay them for the Veterans' Aide and Attendance Benefit. I think doing this will cause me to pay taxes on the contractual amount raising my income some and also affecting other things such as my subsidized healthcare costs.


Doing anything without enough info could have negative consequences.


What have any of you experienced?

On another note you brought up, I've been trying to find a recent BBC story about older workers in tech. I watched it when they broadcast it but I can't seem to find it online.

It's a cliche, but ageism is real in tech. The "old man" on a tech team is the 35 year old. By the time you hit 50, younger tech workers will treat you like other people would treat a 90 year being taught how to use smartphone. It doesn't matter how good you were or are, you are tech dead. 50 seems to be a hard wall. I've known so many 50 year olds that have had great careers, they couldn't find another job to save their lives.

I always thought ageism would go away as tech aged. Tech was a new industry after all. It didn't happen. It's out with the old, in with the new.

Anyone in tech, unless you are the few that make it up the upper management path, should plan on a second career post tech for the second half of your work life.
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Reply to needtowashhair
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Gnarley, I'm assuming your calculation of your parents' $1,300 net cost with A&A benefits for paying you $2,000 monthly was either calculated or verified by the VA, but if not, then either have the VA or the California Dept. of Veterans Services do that for you. Also know that as your parents age, the hours they need your assistance will increase. Anyway, what you could do is keep some or all of the $700 net benefit (less any income taxes you would owe on on the $2,000 they paid you) available in an account reserved for their benefit, just not in their names. As long as the $700 net benefit exceeds your taxes on the $2,000, there would still be a net benefit for your combined households.

     This plan could also significantly increase your future Social Security benefits, assuming you pay FICA taxes on the $2,000 per month and if your current 35-year average indexed monthly earnings (AIME) is less than $5,397 and especially so if your AIME is less than $895, but by only a small amount if your AIME is more than $5,397. (FYI, I looked at the interesting irs.gov link about family caregivers that needtowashhair sent, but from that I didn't reach the same conclusion. To wit, on that site is the statement: "However, in some cases the caregivers are not employees. In such cases, the caregiver must still report the compensation as income of his or her Form 1040 or 1040-SR, and may be required to pay self-employment tax depending on the facts and circumstances." None of the examples given on that site add clarity in your situation.)

      As I previously mentioned, I considered doing this while providing my dad's care, but the net benefit after my taxes would have been pretty small (with no increase to my SS) and 4 of my 7 siblings made most of my caregiving decisions more difficult than they needed to be anyway, so I decided a caregiving contract wasn't worth the grief I would have gotten. As it turned out, with the VA's A&A help and then the sell of his house, I could have kept him in the best memory care facility in my area (just a nice 5-mile bike ride away) until he was over 100, but he died shortly after his 97th birthday.

Best wishes for you and your parents.
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Reply to bicycler
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Gnarly:

Please see an elder care attorney in your state for the best and most valid advice. They often have little known, but creative suggestions that apply to your state.

A CPA may have suggestions, regarding your income tax benefit, but is not the best person to ask for elder care benefits advise in general.
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Reply to Heather10
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Gnarley, the answer to your original question is, yes, an official care plan that legitimizes your parents' monthly payments to you so the VA can deduct that cost from their income, thus qualifying them for the VA's A&A benefit, will, in fact, make their payments to you reportable as income for tax purposes that may very well affect your own subsidized health care costs. As I see the situation, it's a trade-off and you can't have it both ways, i.e. payments from your parents to you can't be both a non-taxable gift and legitimate payment for necessary services that qualifies your parents for VA A&A. Your parents' prior gifts to your sister will probably not be a VA consideration, but if those gifts to her occurred in the last few years, you should confirm that with the VA social worker before you decide whether or not to have a personal care contract. And if there is any chance that either parent may need Medi-Cal assistance in the future, it would be wise for you to verify with that agency that your VA personal care contract also is sufficient for Medi-Cal purposes.

My only experience with VA A&A is that I got my dad qualified for that benefit by using the A&A payments to first help pay for his adult day care and, later, to help pay for the cost of memory care assisted living. I had considered having a personal care contract for both VA purposes and possible future Medicaid purposes, but ultimately did not do that due to tax and sibling issues.

Kudos to you for helping your parents through these difficult years. I hope your sister is also helping or at least not making everything more difficult.
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Reply to bicycler
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Gnarley Feb 25, 2020
Bicycler, you're in almost the same situation care wise, thanks for your clarity! I have two sisters who don't help due to distance and health issues.

I have enough things to do without further complications due to tax needs. Would some legitimate payments to me help, sure! That said, I don't want to accept much from my folks as what they'd pay me is much more than the reimbursed amount for the A&A benefit after the adjustment that begins with their income, subtracts the contract amount paid to me leaving a lower adjusted number that is then used to calculate the difference that the VA pays back. For instance they could pay me $25 an hour which is lower than local caregivers for 20 hours a week which I do and then some which would be roughly 2k a month. The VA I believe would only pay them back about $700. I don't want the 2k a month and see their savings diminish with a net loss of $-1,300 monthly.
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See an eldercare attorney or a CPA.
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Reply to Bridger26164
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Katiekat, still wrong. Do your research. Not all income is subject to SS and Medicare tax. Hint: not everyone pays in to SS. Hint Only income above a certain Threshold is subject to SS & Medicare withholding. My husbands income isn’t subject to SS taxes, he doesn’t pay in to it. The more you know!
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FloridaDD Feb 25, 2020
There are VERY few people not subject to SS.  Some church, state and local employees.  I do not see any way a typical family caregiver (other than if under 21) can avoid SS if paid on the books, unless they have other income that puts them over the limit. 
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In a nutshell, if you classify the money as a gift it needs to be less than $15K for IRS purposes. The upside is you don't have to claim that. The downside is, if your parents ever need more care than you can provide and they run out of money for a NH you will have serious problems if you can't get past the look back period.

If you claim it as income it could impact your life and benefits. Helping them out should never negatively impact your future.

Don't kid yourself thinking this could be only a few years. When my mom died in 2003 I assumed my father wouldn't last 6 months without her. Here we are in 2020. He had a healthy balance in his bank account when he moved into AL three years ago. Now he is blowing through that money and I am very worried about the 5 year look back as he did gift some money.
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Gnarley Feb 25, 2020
lkdrymom, thanks, with parents in their early 90's I think it's safe to say they won't last more than 10 years. My dad has lived 10 years longer than anyone in his family and he had a double by-pass 22 years ago so the odds are he doesn't have long and he knows and accepts it. No one on my moms side has lived past 100, she could be the first, but based on averages shes likely to live about as long as her sisters. If things get really bad we can sell our home and move in together in another home, there are options, just not a lot of good ones. I'll be far worse off than they are if I live as long without a pension, VA benefits or children.
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Gnarley, sorry you have had to wade through the muck and mud being slung in this post. Most people on this forum are extremely helpful. There are a few that could be a little more respectful with answers but they seem to get a thrill attacking someone when they disagree with them. I just chalk it up to personality disorders or if I want to be nice, then stress from being caretakers.

With that said, it seems like you have probably done research in the areas of assistance and I'm going to assume you are already aware of medicaid issues going forward, should your parents outlive their money. As far as treating the money they are giving you as a gift or income, I think I would listen to what the VA has told you and I'd also consult with an accountant. It would probably be cheaper than an elder care attorney and this sounds as if your question has more to do with your situation than your parent's situation, even though in a way, they are tied together. An accountant can look at your income and let you know if this money is a gift (which I suspect it is) or considered income. Also if going forward, how it would possibly effect your own health insurance situation.
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Reply to Tiredandweary
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Gnarley Feb 25, 2020
Tiredandweary, thanks!

One of the things that will help my parents is that my dad has VA benifits which will help cover some of their costs. With that help, their income and savings I've projected they should be ok unless they need more than a board and care. My dad will stay at home as long as possible and then will live somewhere else when he needs more care. While we don't know the future my mom is likely to survive pretty well into her mid-90's as her sisters have done and passed relatively quickly after a sharp decline, in less than 90 days. Getting my mom some additional help will make her life better since I can't be there all the time. Her neighbors can't believe everything she still does, cleans, cooks, bakes, gardens some and pays bills! Sure it takes her longer but she wants to do it. I make sure nothing is missed and bills are paid.
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The arguments don't help, do they gnarly? Nobody her is an expert or knows enough to make suggestions, much less advise you. See an elder law attorney for advice. Maybe the VA has them on staff for these sorts of questions.
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Gnarley Feb 25, 2020
Gladimhere, I'm not sure there's any arguing, it's differing points of view for sure, however, a few members feel they can make unfounded statements such as I came here to cry as extremely offensive. I came here to seek advice from others who may have had similar experiences. I didn't even select the headline to my topic, it was changed by someone else and I can't edit it.

My journey with this has been frought with misinformation starting with the major healthcare provider they use, Kaiser Permanente. My Parents Primary provider had been asked multiple times over 9 months for suggestions for more help after my dad had his stroke. I wanted to get him into some senior health program or to a Dr that specializes in senior care. Finally after my dad broke his ankle after sneaking outside the ER Dr suggested he should be referred to a geriatric specialist! I'd only been asking for 9 months! Their existing primary care Dr wasn't referring them, which was what I'd been asking for. We found a new primary care Dr that day and have been finding additional help for them and me finally!!!
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This whole thing sounds super sketchy.
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Reply to HelloImMinsu
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Gnarley, I mentioned Medicaid because the possibility that a person might run out of their own money and need governmental assistance to pay for long-term care always should be considered. If it's not an issue for your parents, that's great.

You helping your parents is a good thing.

If you could find work someplace else, you'd probably be better off financially making the move and getting a regular job. Could your parents pay a nonfamily member to provide them with care?
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Reply to Rosered6
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Gnarley Feb 25, 2020
I've tried to convince them, (mom) that she could pay for help getting chores done or whatever they need. She absolutely won't allow anyone to stay with them overnight. I've been able to get a caregiver in to help them 2 days a week, 3 hours a visit, that was really hard.

I've gotten some counseling and found it's not that uncommon for very old seniors to not trust other people. The meals on wheels said they were too picky to assist with food since they use a lot of broccoli, cauliflower and Brussel sprouts. Leaving the area to restart my career would be great, however, as I mentioned it would have catastrophic results to my parents quality of life. At best I don't think they'll be around longer than 4 or 5 years. I suspect my dad may not last more than a year or two. In end I just want to be sure they're OK and I can meet my own needs while I'm here. Once they've passed on I'll be able move.
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When you are asking if you should report the money your parents are paying you to help them because it will cost you taxes and government subsidies if you do a caregiver contract and your parents would qualify for assistance if you did it legally then yep, you are.

I don't say that everyone is, you started it by crying about losing your public assistance and yes, subsidies are just that.

You don't have any money to pay your own insurance but you can buy a new car. Yeah, whatever.
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Gnarley Feb 24, 2020
Isthisrealyreal, again you don't have all the facts do you? If I sell 2 cars and buy a used one that just might get me something that works. Did anyone ever say anything about buying a new car or going in debt.

While I'm new here I don't find your participation meaninful or helpful. You don't have all the facts and seem to draw conclusions and insert situations that were never included by me.

Please do me a favor and find another topic to provide your insight to, your responses are toxic.
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Gnarley, I believe you when you say that you have not agreed to any compensation. Unfortunately, the IRS decides whether payments are income or are gifts. The IRS will consider how the people involved characterize the payments, but the IRS is the ultimate decider.
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Reply to Rosered6
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Good point, worriedinCali. Yes, the income might not be high enough to result in the recipient having to pay taxes.
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Gnarley Feb 24, 2020
Isthisrealyreal and others, I'll say this once, nicely.

I am not earning an income, I have not agreed to any compensation for any of my help. There are no wages, UNDERSTAND?

I'm also looking for a newer car in order to transport my parents who have trouble getting into my vehicles, this will cost me several thousand dollars out of my pocket.

Is everyone a cheat in your opinion?
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The money is either a gift or payment for work.

If the money is a gift and your parents need to apply for Medicaid in the near future, the money might be considered a divestment.

If the money is payment for work, it is taxable to you as income, and you or your parents need to cover the deductions for Social Security and Medicaid also.

You and your parents can choose how to characterize the payments, that is, to label them as gifts or as payment for work. Just make sure that you follow all the associated laws and regulations. For example, if you and your parents decide the bigger concern is Medicaid divestment and thus that the payments should be payments for work, yes, definitely create a caregiver agreement. The worst outcome would be for you to be treating the money as income and paying taxes on it, and then the government saying that because there isn't a caregiver agreement, the payments are considered Medicaid divestment.
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worriedinCali Feb 24, 2020
If the money is for work, you have no idea whether it’s taxable or not because you don’t know how much the OP was paid and if He’s even required to pay taxes at his income level. All income is reportable
but not all income is taxable.
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First, thank you for your responses. There is no fraud, at as the gift was not based on caregiving. The gift was based on bills and easing my burden and thanking me for things that I've done for 30 years. They gave much more than that to a sibling and her family to help them, so is that fraud and taxable?

There has been no payment for an agreed amount of help or time and nothing such as the Social worker suggested for VA benefits. It's likely that the VA benefits will only begin when my father needs to live in a board and care.

I did not know if I became a compensated caregiver for my parents and as a family member if that would require me to claim it on my taxes since it's between family members. Deciding to consider this does not mean that anyone is breaking a law, it means that someone is being careful about how any changes could have undesired consequences and everything needs careful planning to make the right decision for the needs of all parties.

Everyone should consider they likely don't have all the facts and anyone else in a similar situation is likely to have an entirely different situation so perhaps everyone should tread lightly until you've walked in that person's shoes.

My caregiving will continue regardless.
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Reply to Gnarley
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worriedinCali Feb 24, 2020
The money you’ve received isn’t fraud. or taxable unless they are giving you more than $15k A year. If you become a paid caregiver for your parents, the income must be reported to the IRS but it’s not necessarily taxable—whether or not it is taxable will depend on your income level. We don’t know your income status (nor should we) so we shouldn’t be telling you that you should be paying taxes on it. You haven’t defrauded the tax payers unless your parents are gifting you large sums of money. It doesn’t sound like there’s been any wrong doing here.
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Unless they are giving you thousands per month, MEDI-CAL isn’t going to look at the payments as gifting. What they look for are large transactions.
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Reply to worriedinCali
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The money's being a gift could become a problem should either parent need to apply for Medicaid. A formal contract would avoid that: the money paid to you in exchange for your time spent supporting them would become part of their living expenses, and not given away. And there are also the VA benefits to consider.

On the minus side: you'll have to add up. How much tax increase? What potential loss of benefits/subsidies?

As long as you don't stray too far from a reasonable hourly rate, I suppose your parents could adjust the agreed payment to take account of any potential disadvantage?

But there are other questions you need to consider just as carefully. How long are you prepared to commit to this, and at what point might your parents' needs get beyond you? Suppose the perfect contract comes along just at the moment when one's in hospital and the other is panicking? Suppose you find that you can't even handle small freelance projects because you never do get three uninterrupted hours?

I should make good friends with that social worker, and as well as giving thought to a contract give thought to a wider support structure. You can't make yourself indispensable - it could be a snare for both you and your parents.
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Reply to Countrymouse
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Without a caregiver agreement, it will likely be considered a gift, and not taxable to you, but as you noted can impact their ability to access government programs such as VA.   With one, it will be taxable, but you should run the numbers, I doubt the tax will be much at lower income levels, and you could still qualify for subsidized health care in many places.
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Reply to FloridaDD
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You might not realize it, but there is two separate issues at work here.

one...your income and taxes will go up. But, this protects you too. 1) you contribute to your own retirement through social security payroll deductions. 2) you have workman’s compensation insurance should you be injured helping your folks. 3) you have unemployment insurance should you suddenly have no more job working for them.
meanwhile, your subsidies for health insurance remain the same as long as your income is at or below 150% of the poverty line. (About $17k). I don’t know how much your parents plan to pay you.

the other issue is that without a caregiver contract and above board payments anything your parents pay you will be considered a gift. This could cause them to not qualify for subsidies because they must use their income for the exclusive use of their own care....not gifts. It would also leave you without evidence to prove that money wasn’t elder Abuse. Yes, taking financial advantage of the elderly is considered abuse by the courts.

I don’t know if that helps you sort it all out, but try checking with your State run ACA insurance to see what those limits really are for you.
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Reply to Katiekate
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Gnarley, welcome to the forum! And bless you for jumping in the fray to care for your LOs! There is lots to navigate...including the finances of it all, since there are many pitfalls for those who are not informed.

What is the financial situation for your parents? If they ever require financial assistance for medical needs, the gifting of money within a 2.5 yr look back period (in CA) may be an issue. I'm not familiar with how it works with the VA but others who do will respond and it will probably help them to know your parent's financial "health". Also, your tax exposure may be nothing compared to the financial burden if your parents need medical financial assistance from the govt but then don't qualify because of the gifting of money.
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Katiekate Feb 24, 2020
The look back is 5 years for Medicaid. This is one of the basic rules set forth for how all states must govern Medicaid.
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I think that you are defrauding the tax payers if you are being paid to care for your parents under the table.

You should protect them and do what is honest, get a caregiver contract and start paying for your insurance.
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FloridaDD Feb 24, 2020
I don't think it is fraud, but it will be treated as a gift
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