Will Medicaid consider this arrangement as legitimate rent or a monthly "gift"?

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My 84 yr. old mother has severe anxiety, especially when she must be alone while I work. I moved the 2 of us to Missouri 2 mon. ago to reduce my expenses to the point that I could be home with her more by working part-time. Trouble is, she now wants me to stay at home with her FULL-TIME. She wants to pay me $2,000/mo of her $2,200 SSI, IRA disbursement & pension as rent. I make all of her meals, wash her clothes, drive her to doctor appointments, manage her money, manage her medications, change her bed, do all of the housekeeping...basically what an assisted living facility would do for her. This "rent" would be my sole income and, from it, I would be paying the mortgage, property tax, homeowner's insurance, electric, phone, satellite TV, vehicle insurances, gasoline, any "entertainment" (eating out, movies, tickets for plays, concerts, etc) and food & medications for BOTH of us. My CPA says it's all legit if she signs a renter's agreement & that I would just file a tax return for the rental income. I want to keep her here at home as long as possible (hopefully until the end) but I'm realistic that it *may* not be possible & I'm absolutely PARANOID about Medicaid look-back. There is NO WAY I can afford to pay out of pocket for her care in a NH. Unfortunately, there are no elder lawyers in this rural area & I would have to drive 2.5 hrs to the nearest one. I already have medical AND financial POA. If I have her sign a rental agreement, will Medicaid see her "rent" payment to me as legitimate expenses or as a "gift"?

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MaggieMarshall...I fully agree that Mom needs assisted living but, as I have explained before, if she says she won't go, I LEGALLY CAN'T MAKE HER! Even if I took her for a one week respite, the facility has already told me that they cannot legally prevent her from leaving...even if her only way out was to walk off on her own. Now how safe is that?

If I allow her to stay home alone, not only do I have to deal with multiple phone calls at work that stress me out, I have to worry what's going on at home. Her sense of judgement goes out the window when she gets nervous...all she can think about is whatever has her bent out of shape & I spent many days at work wondering if, in her hyper-anxious state, that she would leave the stove on & burn down my house. Talk about stress!

Even if things like that weren't a concern, I have 3 giant-breed dogs that weigh over 200 lbs each. When I am not here, she insists on taking them out to pee on a leash instead od just turning them loose in the fenced yard. She does it because she claims they won't come in when she calls and, if they don't, it sends her anxiety through the roof. She's 84, 93 lbs & her osteoporosis is SO bad that her doc says some day a bone will break just from her own body wt & cause her to fall. Falling would most certainly cause at LEAST one break. If one of the dogs pulls her down, she's falling on concrete! Again, how safe is that?!

I've been told that, since she lives in my home, knowingly leaving her in a situatuon where I know she could get hurt or die could leave me open for prosecution for neglect. I love my mother but I'm not willing to gi to jail for her!
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I can explain some of it in more detail. You need a witness because you are a relative and the state or irs may consider it coercion or a way to shelter money. You do not need two witnesses. You need to go to a notary at a bank, sign in front of them and have the stamp put on it. Even though I am a notary, I cannot sign any documents for my boyfriends family because it is a conflict of interest.

If you have a business like a llc or dba, you can write off all expenses directly related to your contract with your mother. Example, food bought by your business prepared under your contract and consumed specifically by her. Any direct expenses will lower your lower marginal tax rate. Did by any chance when the CPA did the number crunching consider you head of household? If I was doing your taxes that is what I would have assumed or done. As an accountant, we do not know the details of Medicaid or other personal considerations. The job is to comply with tax laws and get a maximum refund.

If you have a company your mom is paying, you are an entity not an individual. Your mom cannot be an employer of an entity only an individual. If you do a dba, pick out a very vague name ie Ozark General Services. All you have to do maybe mow a neighbors lawn for $25 and you have another source of income for the year.
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Have your MOM pay her own expenses...rent, utilities, household food, etc. instead of paying you. If you're happy not working and becoming a 24/7 caregiver to mom, good luck with that. If mom needs that, she needs assisted living at the least. Keep your part time job. Let mom pay all the living expenses. Have her buy your car and pay to run it. Etc. no checks to you.

Your mom would like you to be home with her all the time. I would like to be taller.
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Babalou....even if she would relent & let a hired sitter/caregiver into the house (she hasn't in the past), the expense is what has prevented us from going in that direction. Since she gets medication in the middle of the day & can't manage them herself, I'd have to hire a licensed nurse & the cost would be much higher than the $19/hr aide. And, no, my mother was always the "rock" of the family but these anxiety issues started in her mid-70's & have only snowballed the older she gets.
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I must say I'm a bit confused by it all. The CPA crunched numbers in front of me & said that if mom signs a rental contract for room & board that the rental money would get reported to the IRS on a schedule E form & that at $24000/yr, my adjusted gross income would be so low that i wouldn't owe any tax.

Tacy022, how can I make myself into a company if I'm not actively looking for clients other than a relative? Also, I was told that if I went with a caregiver contract that Mom would be seen as my employer & she would be hit with taxes for the part of SSI or whatever that is normally paid by a traditional employer.

Honestly, it's like no one actually knows what to do for me to protect myself if I have her in my home, but no one can give me any ways to legally force her into AL. The elder lawyer I spoke with back home was obly interested in collecting a huge fee by having a nursing home illegally sedate her into submission. Another lawyer I spoke with back home advised Mom to give me $500/mo because she could (allegedly) do that without either of us incurring taxes or affecting the lookback period. Well, the lawyer I just spoke with here tells me that was completely wrong & that money WILL affect the lookback because Medicaid will see it as a gift. One tax person here mentioned about the office thing but never mentioned that I'd have to do an LLC. The CPA says a simple rent agreement is fine & that money will be reported as rental income. And another lawyer here has told me that I can write my own care contract & have her sign it, no lawyer need be involved, nor any witnesses. EVERY PERSON I TALK TO GIVES ME A DIFFERENT ANSWER AND I DONT WHAT IS CORRECT!!!
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Has you mother always been mentally ill? I don't say that to be mean, but that's what I'm reading here.

I want you to think, long and hard, about what would happen in you died from a heart attack and couldn't care for mom any more. that's right, she'd go into care and doubtless be happy as a clam. My very strong suggestion would be for YOU to find yourself a therapist, order the book Boundaries from Amazon and start doing some work for you. This kind of situation is untenable.

What happens if you hire outside help and get out for an afternoon? She cries? So she cries. So she wrings her hands. Please give this some thought. You need to take care of your mothers NEEDS not her WANTS.
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The problem Pam is just signing a care contract is the issue of taxation. She will be slammed with self employment taxes $3696 just in social security. Depending on any other income she or possibly a spouse has then her marginal tax rate will go on top of that. Then the state self employment taxes need to be considered. In addition due to the Patriot act banks are required to report that much money being deposited into her bank account each month to irs. Like I said her best option is to create a company for her own protection and to limit her own liability.
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Your CPA is only looking at the TAX question, not the LEGAL question. So find a sample care contract online, print it out, fill in the blanks. Have mom sign that in front of two witnesses that are not related to her, but know her.
And for sure, do the taxes on it, or it will be a gift in Medicaid's eyes.
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I wish it would work, tacy022, but Mom will listen to no one. Her mind is made up that she's staying put & she won't budge for anyone. I've tried to talk with her about the burden she's placing on me but she'll claim that she has no problem staying alone & there's no reason i can't go places or even work...but when the time comes for me to go, she's crying & wringing her hands & telling me she doesn't want me to go or sje wants to go along because she's afraid to be alone. I tried working in the garden last night. She could easily see me from the living room window but she came outside 4 times in 30 minutes asking when I'd be back in because she didn't want to be alone. I tried to take a 15 min respite in the shower & she came in 3 times asking if i was ok & if I'd be coming back out to the living room soon. Again, when I confront her with this & tell her how smothering it is to basically have a stalker, she gets angry, says I'm exaggerating, she's fine being alone & how could I be so mean? Like i said before, I'm trapped in a legal donut hole or no-man's land or whatever you want to call it. I thought i was being the good daughter having her move in with me a few he ars back but, apparently, no good deed goes unpunished because now I can't force her into AL & I can't evict her.
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I understand your frustration luckily my boyfriend's mom's dr is my doctor and a coworker of my mother. He had to put me on anxiety medication for the stress. He forced her into rehab for a month by threatening to drop her as a patient for not listening to him. The 2 and a half weeks she was gone was enough to give me a break. You could try that if the doctor will go along with it.
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