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That probably depends on the amount you are paid and how the paperwork is set up. I strongly advise that you see a CPA to make sure all is in order. You don't want legal problems just because you are doing your best for your family. Please get professional advice for your specific situation.
Carol
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I am not the attorney that you need, but as a lay person I was told that if the money is gifted there is no tax burden, BUT you will be liable for this sum if you apply for Medicaid and it is given in the 5 year look back.
If you believe you need to clear that look back hurdle then the money will need to claimed as income and taxed. The caretaker contract should be done by an attorney to be sure it will clear the look back also.
Hope this helps.
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You need to see an elder care specialist attorney and have this set up. When you go, if you don't have POA, health directives, a will, etc already in place you should get all that done too.
This shouldn't be expensive and is a necessary expense from
her estate. You should not pay for this because if there is any
arguments over $$ later on and you paid for it, they can claim
that you steered your mom to your benefit. By having her pay for it, it get's that argument closed.

They will have stock forms that work for your state - that is critically important as medicaid look back is different for each state and you want what works and is vetted. But this needs to be done by an attorney - really.

However, you can call home health agencies to get a packet from them to get a realistic idea of what you can charge. Community standards determine what's reasonable. It can vary by location.

Also if you have any specialized training even if it was ages ago that can be used for justifying a higher rate for you. So if you have a MBA you could bill her estate $ 500 a month for estate management for looking at her bank statements but couldn't do if all you have is a GED. It may not be fair but is legit.

Good luck!
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If you are receiving income earned for providing a service to your mother, the IRS considers it self employment income. You can deduct expenses you incur in providing the service, such as food, supplies, and other expenses for her care. The income and expenses would be reported on Schedule C of your income tax return, and you will also need Schedule SE to pay self-employment tax on the net income.
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If you are receiving regular income earned for providing a service to your mother, the IRS considers it self-employment income. You can deduct expenses you incur in providing the service, such as food, supplies, and other expenses for her care. The income and expenses would be reported on Schedule C of your income tax return, and you will also need Schedule SE to pay self-employment tax on the net income.
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IRS has a special Revenue Ruling that specifically exempts payments to family members for taking care of OTHER family members, in their home, from Self-Employment tax. This is because the care-giver is NOT considered to be "in the trade or business" of providing in home care services. Warning: If you do this for OTHER people, non-family members, you WILL be in business and WILL owe Self-Employment tax on ALL the funds received, including those from your family member.

But, if it is JUST for a family member, and NO ONE ELSE, report the NET income from your care-giving: gross paid to you, less ecxpenses incurred in care-giving, on Line 21, Form 1040: "Other Income". Describe it as"family care services"

Robert B Carroll, MBA, EA

10 years as IRS Tax Auditor, 29 years as an Enrolled Agent professionally operating a Tax Preparation firm.
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I going to throw my two cents in for whatever it is worth. We all know that, r dear Uncle Sam is not going to allow us to have any assests giving or earned WITHOUT having to pay something back.
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One thing to consider here is that paying self-employment and income taxes may ultimately be a benefit. Many of us are not receiving social security credit for the unpaid work we do. This affects us not only now, but into the future. It may be to your benefit to consider this self-employment. Paying a little tax now can have benefits on down the road. I am not an expert on this, so I would consult with someone who knows more than I do. One of my main concerns in doing caregiving is how it is affecting me in the future.
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Jessie - I agree with you 100&1%, reporting and doing a 1099 or getting a W-2 etc so that you can do whatever you can to increase your or your spouses's (if married for 10+ years) SS work history is by & large the single easiest thing to do to increase your & your DH' retirement benefit. This and waiting to draw SS till after 66 so that you don't get taxed on work income and get the max pay out is imho the way to go. Alot of women don't have enough quarters in SS to get a decent pay out - as they didn't "work" (yeah, lmao) - so if you are in that situation reporting caregiving work into SS will be a lasting and long term benefit. Remember SS is an investment based entitlement - so the more your pay in the higher the payout. For our parents most of them get like $ 600 - 900 a month as their working years were in the 1940- 1970's when wages were much much lower than today. Their base investment $$ wise is pretty low from a 2012 viewpoint. If you were working and making a good living in the 1980's on you could be looking at a SS payout of over 2K a month. You can go online to SSA to see where you stand today as to what the payout would be if you retired, I think it's a good idea for any of us in thier 50's to do that and discuss with your DH to realistically plan.
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GreatLaker mentions an IRS ruling that "exempts payments to family members for taking care of OTHER family members". I can't find it. Can you tell me how I can get a copy of this ruling?
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As Jessiebelle said, many of us gave up paid work to become caregivers and will in the end suffer the loss of Social Security income.

As to the ruling about exemptions for taking care of family members, I'd have a CPA check into this. Having a CPA do your taxes can be beneficial. They need to keep up with the ever changing tax laws. I say this for the same reason that I advise people to have a conference with an elder law or estate attorney for many issues. Sometimes one meeting is all that is needed, but having the advice of a professional who knows not only federal law but your state laws can give you a lot of peace of mind.

Best wishes to all of you. Caring for our ailing loved ones and trying to pay our own bills at the same time is a huge challenge.
Carol
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GreatLaker, please provide pertinent IRS details. Thank you!
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Just in case anyone needs to fill out a Form 1040 Schedule SE, I found a blank form in this link http://goo.gl/eTy0cP. This site PDFfiller also has some tutorials how to fill it out and a few related tax forms that you might find useful.
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I recently left my full time job to care for my mother in law in our home. I am going to receive a check every month to cover all expenses from her account. (my sister in law is her POA) That money will be used for her full time care in our home including food, in home expenses etc. How must I report this and how will this be treated? Thank you
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