Does a relative who is caring for an elderly relative have to pay taxes on the money they are receiving from the elderly's assets?

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Yes, you pay taxes on it and Medicaid would also insist there be a written contract in place. Otherwise Medicaid considers it a gift and will assess a penalty.
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It depends on how the money is being used. If you are being paid to take care of the relative, yes, it is taxable. But if you only receive the money it takes to buy food and pay utilities -- IOW maintenance -- then no, it is not taxable. We would have to know more about the money received to answer the question.
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