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She is 95 years old, has mild dementia, is unlikely to be able to return home due to several problems. She was recently placed in a nursing home and she has a lot of credit card debt but all of her income goes to the nursing home. She owns a house worth $75k. I understand the credit card companies can't touch that according to Florida law. She lives in Florida.


I understand that the credit card companies file a form with the IRS and the written-off debt has to be counted as income on the person's tax return. And I read there are ways to show that someone in her situation is indigent and this written-off debt should not be counted as "income." I am not sure how Florida Medicaid sees this, if this could cause her to lose her coverage or if there is some form to fill out or something I have to do. I have POA.

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You'll need to hire a CPA for this issue.
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Rovana, I didn't say paid off in my second post I said written off. I understand by what I read up on that if you come to a deal where you owe 10k and they give you a payoff amount of 8k the difference of 2K that they wrote off is considered income. Doesn't matter if the whole debt has been written off or part of it.

creditcards.com/credit-card-news/forgiven-debt-1099C-income-tax-3513.php
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Since the IRS calls it income, I'd think that it might affect Medicaid, too. State laws are so different about Medicaid. I suggest you get advice from a FL Elder Law attorney.
My guess, based on unpaid credit card debt of some people I've known, is that they won't write it off for years. She may not outlive it. Especially if no one tells them she won't ever pay it.
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Joanne, paying off the debt is not the problem - paying it off is not income. But, if the debt is forgiven, that is a different matter. Follow igloo's post - very knowledgeable.
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Burnout - also even though the OC writes off the debt and issues an 1099-C, the debt can & likely will still be sold to debt collection. If mom has her address as the NH then the NH will be getting the debt collectors letters and phone calls. Nothing but fun there & could be an issue for the NH.

If it’s your address for mom, then expect phone calls and letters to you. So work up your “not my debt” speech . You may want to send certified letters to each debt collector as they surface as to not contact you or the NH.

If mom is kinda still in the process of becoming impoverished, think if it could be useful to rent a mail box for her that becomes her new address for creditors, insurance, Medicaid, etc. Keeps you & her separate for mail. Uspo & UPS stores rent boxes. But what may be more useful is a package / shipping independent type of store that has box rental as you develop a relationship and they call you when something interesting comes in. 
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Thanks for the info. Mom is paid up on her credit card debts through January of 2018. She just had severe health complications that required a nursing home stay, likely a long-term situation. So I guess next year I will have to get with a tax expert who also is familiar with the Medicaid rules in Florida.
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Burnout - it is VERY important to eventually deal with this...
What will likely happen is once CC debt is written off by say VISA, is that VISA as the “original creditor”, aka the OC, will issue a 1099-C Cancellation of Debt to your mom. It will not be for just the debt owed but whatever interest and fees can be tacked on till actually written off. So 20k could morph to $24,567.89. It will be mailed out by the end of January following the year it is written off. The 1099-C will also be sent to the IRS, and this is what makes it important for you to deal with for mom...

So if written off 2018, then it becomes an issue for 2018 taxes mom / DPOA needs to do by April 15, 2019. It will be considered taxable income for mom. Each 1099-C will totally be taxable income due to IRS.

If taxes due are not paid, the IRS as a supercreditor can attach mom’s SS monthly income (or any other federal income like civil service pension) to pay the IRS. 

Problem is under Medicaid compliance, mom MUST pay her SS monthly income to the facility as her copay or SOC (share of cost). So it then morphs into an issue for mom’s stay at the NH & her Medicaid eligibility.

What mom or you as her DPOA will need to do a IRS 1040 and IRS Form 982 to get her zeroed out for taxes due. The 982 - to me - is not ever a DIY or TurboTax situation but more a CPA filing as the 982 is totally sticky. Most articles on 982 center on 1099-C issued due to foreclosure and that situation has all sorts of write offs cause it’s property. For CC debt 1099, that’s not an option, it’ll be more involved debt structure write offs.

Did mom got a 1099-C for 2017 taxes?
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Just read up on it. Like u stated, its considered income for what they have written off. This is when you make a deal they will except a lower amount so you can pay it off. So if u owe 10k and they agree to 8K your income would be 2k. I think you need a CPA involved. If Mom has no money than she Can't pay income taxes. My Mom made a little more than 20K a yr. 18k of that was SS. She was told years ago by the IRS she no longer needed to pay taxes.
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I don't understand why paying a debt off becomes income.
Anyway, Mom Can't pay the debt. She has no money. Now she is in nursing care, even private pay, all money she has goes to pay for her care especially if looking for Medicaid help in the future. You Can't pay taxes, upkeep or utilities from her money. Some on the site say not to contact the credit card people, then they start coming after you. You are not responsible for Moms debts so please don't start trying to pay this debt. If you pay the minimum, it will take 18 yrs and that is 18% a year. Almost 12K in interest. Call your Office of Aging and see if the have someone who can help you in how to contact the credit dept advising them that Mom is not able to pay the debt. Believe me, a lot of that 20k is interest and fees.
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Oops, I meant over $20 thousand in debt...
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