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My mother is 85 and lives in an assisted living community. It costs $5,500 a month. She has a pension of about $40,000 a year and a slowly dwindling IRA (about $5,000 left) so I pay the shortfall. She has no savings left. It all went to her care. I pay her Medicare bill and the bills for her house which I hope to fix up and rent.


Since taking over her care I’ve filed her taxes every year but this year I just don’t want to. It seems unfair that she always ends up getting about $685 in a federal return which I then end up paying to the state. Funny how it always works out like that. So I’m wondering what will happen if I just don’t bother? The woman is 85 and basically has nothing. She worked her entire life, always paid her taxes and now at the end she STILL has to file? I know the rules around this and how it came to be (thanks Ronald Reagan), but I’m wondering what’s the worst that could happen if I just don’t bother.

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If she could live a long time, she could get audited and end up paying fines and penalties for not filing, I would do it only because she usually owes the state. If she never had to pay anything, no big deal. They will be looking for the ounce of flesh from your mom. Actually it is a big deal if she has assets, you don't want them taking anything from her. She makes more than the allowed amount for not filing. And there are major tax changes for 2018 that can change everything. You can't fight the IRS so it is easier to comply.

I would check the requirements for Medicaid for your state, 40k annual pension most likely stops her from getting Medicaid. Check what you can do to get her qualified. My dad only gets 27k and he makes to much for assistance. We could have spent thousands for a Miller Trust but he didn't have any extra to cover the attorneys fees.

I think keeping the house to create income is a great idea, maybe you will get enough ROI to cover her monthly expenses.

Good job, keep it up! Your mom is very blessed to have you advocating for her.
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Weelll, they could put a levy on the house, among other things.

Why don't you sell the house?
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MACinCT: No, I don't claim her as a dependent. I feel like she's not really a true dependent since she has a pension to take care of her. True, it's not enough, but it's there. She does not receive social security. She never worked under the system. She taught for 32 years, all under a pension system.

I'm very curious about the 45% deduction for memory care...
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worriedinCali Feb 2019
The IRS would never allow you to claim her as a dependent anyway because her income is too high. Her gross income has to be less than $4,050
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I live in Canada & we file provincial & federal taxes together - when I filed for mom usually all I paid was $300-400 to the province for her annual medical insurance

Makes me happy to be on the right side of the border - thanks for the reminder
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It makes more sense to rent out the house to create a perpetual stream of income versus selling it and running through the money in perhaps 2 and half years. Physically she’s in excellent health. If it weren’t for the dementia she’d still live in her home. People in our family tend to live well into their nineties so I’m preparing to pay for her care for at least 10 more years.
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No adjudication, just the diagnosis. Cognitive Dementia. She lives in her own fantasy land, which I’m kind of happy about. She’s doing really well. The place she’s in is private pay only plus I’d hate to move her. The Medicaid places around here tend to be the third circle of hell. It makes me so angry and sad.

Unfortunately I’m not wealthy but I have a good job and an apartment building so it all works for now. I’m four years from the first child heading to college and six years until the other. That will definitely complicate things. I’m a perfect example of the sandwich generation.
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Segoline Feb 2019
so you have a nice one with dementia?? The unicorn has been found!!

Kidding Op. Most of ours are beasts.
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Yeah to shower Tuesday. It's everyone's enemy. You are a good kid and trying to do right thing for your mom.

The house is always a thing. She has attachment. You have one too. That's understandable. But don't let it preclude your judgement and make you a prisoner of the memory, ok?

My mom was an educator too. Got doctorate and went on to be an educator at the college level. Widow since 48. 93 now. She, over course of her life, owned 10 houses, in 3 different states. Don't get me started on that.

We want the best for YOU.
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Yes, you have to file. Moms pension is taxable and so is her SS because of her pension. Until the IRS tells you different, you need to file.
My Moms income was about 20k. 17k of that was SS. The rest was a sm pension. IRS sent her a letter saying she no longer need to file taxes.
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I can't urge this enough. The new tax law is going to give some shockers. Wait until this sorts out. Many things previously deductible are no longer so. Talk to a CPA.
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Definitely file the taxes. My husband is POA for his brother who's in a NH and we have been doing his taxes for 3 years now. He has SS and 2 small pensions, plus he's spending down his IRA. On paper, is income looks "high," but becasue of the very high medical costs, he ends up getting back both state and federal taxes that were witheld from his little pensions. Even with the new tax law, his medical deduction far exceeds his income. Assited living may be differnt than NH n terms of taxes, but at least part of it might be a medical deuction.
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