Do I have to provide a 1099 to my daughter if I pay her monthly to care for me?

Follow
Share

How should she file her taxes? I PD 5100. Last year to her. I am disabled and unable to care for myself. I am no longernable to drive per physician orders. My daughter now lives w/ me with her baby. I am her only source of income.

This question has been closed for answers. Ask a New Question.
Find Care & Housing
2

Answers

Show:
Deborah, is it possible that you will ever need to apply for Medicaid? I don't know how old you are or what your impairments are, but many people live much longer now than previous generations did, and their money runs out -- especially if they have health issues.

If you ever need to apply for Medicaid, the agency will want to know that you didn't give money away just to be eligible for this program. In that case it will be good to have evidence that you were paying your daughter for a service and not just giving her gifts.

For this reason, it is best to provide her with a 1099 and for her to file her tax statement as a self-employed person. Her annual income is so small I doubt she will have much of a tax liability, but she might owe some Social Security payments (which will be good for her later on).

I know it is hard to think about paying for "unnecessary" services on a fixed income, but it might be very good to consult an attorney who specializes in Elder Law, to set up a personal care agreement, to take care of power of attorney documents, wills, and a living will.

Best wishes to you both.
Helpful Answer (2)
Report

You are supposed to do a regular payroll including withholding and file quarterly payroll tax reports. It would be better to have her paid through an agency and have them do the payroll.
Helpful Answer (0)
Report

This question has been closed for answers. Ask a New Question.