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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 6244
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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My husband has power of attorney for my father in law. We

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My husband has power of attorney for my father in law. We just sold his house in Oct because he needs round the clock care. We were looking at nursing homes, but he ended up moving in with his care giver of 8 years, and we are paying her his SS check and Pension each month. We were told he did not pay taxes for a few years because he only receives SS and his pension. Do we have file this year for the income of the home? It was his only residence for at lest 5 years.

Stephen G :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything that is not clear.

Stephen G :

Well there's a couple of things to consider:

Stephen G :

First, you need to know how much he receives in Social Security & how much he receives in his Pension. You should have a form from Social Security which will indicate how much of his Social Security may be reportable (not necessarily taxable);

Stephen G :

You should also have a form 1099-R for his pension.

Stephen G :

That 1099-R will also indicate how much is potentially taxable.

Stephen G :

The next thing is to figure out what you need to do about the sale of his home, if anything.

Stephen G :

What was the selling price of the home & did he receive a 1099 related to the sale?

Customer:

the sale of the home was $75,000, and no we did not receive a 1099-r form. He receives $2028 inSS and $1182 in Pension

Stephen G :

OK, forget anything with his home, he has an automatic exemption of $250,000.

Customer:

so we don't have to show as income?

Stephen G :

OK, he would be required to file a return, even thought it is doubtful that he would owe anything as he must have deductible Medical expenses that would exceed his standard deduction by a substantial amount.

Stephen G :

A small portion of his Social Security would be subject to tax, but again his expenses should eliminate that.

Stephen G :

The way that is figured is:

Stephen G :

You tax his annual pension amount $1182. x 12 = 14,184. To that you would add 1/2 of his Gross Social Security (the amount on the form received from Social Security in January 2013 for 2012).

Stephen G :

Now that will be somewhat larger than 12 x 2028. that he receives as his Part B Medicare premium will have been deducted. So using an estimate of 100. a month for that you would get

Stephen G :

2028. + 100. = 2,128. x 12 = 25,536. times 50% = 12,768.

Stephen G :

14,184 (pension) + 12,768. ( 50% of his Social Security) = 26,952.

Stephen G :

To the extent that the $26,952. exceeds 25,000., the excess is added to his gross income; so that

Stephen G :

would be $1,952.

Stephen G :

So that results in gross income of $14,184. (pension) & 1,952. (taxable Social Security) or

Stephen G :

$16, 136. in gross taxable income.

Stephen G :

How old is your father?

Customer:

85 with alzheimers and parkinsons

Stephen G :

Ok, well clearly he wouldn't owe any tax.

Stephen G :

And

Stephen G :

Again, there is no reporting requirement on the sale of his house; that's why he didn't get a 1099.

Stephen G :

He is well within the $250,000. exemption.

Customer:

can we use the 3,000 we pay the caregiver as medical expense? and from our understanding he has not filed taxes in a few years. We just took over this mess last june....long story

Customer:

is he in trouble for not filing?

Stephen G :

Well for 2012 if his gross income for tax purposes is $11,200. or more, he would be required to file a return.

Stephen G :

Is he in trouble for not filing? No. Any penalties are based upon tax owed and he clearly doesn't come close to owing any tax.

Customer:

ok...maybe a call to the IRS.......Thank you very much

Stephen G :

You don't need to call the IRS unless you want to file a return for him.

Customer:

not really.......should we just forget it then?

Stephen G :

I can only tell you that based upon the computations above, he would be required to file. That doesn't mean he would owe any tax.

Stephen G :

But obviously, I can't tell you not to file.

Stephen G :

But that's just professional advice according to the regulations; you have to decide what to do & I think you asked the key question, is he in trouble?

Stephen G :

No, not under these circumstances. Besides, what would they do with him. Congress can't even agree on when to take a coffee break; I mean they are letting criminals walk now due to budget issues, I doubt they are very interested in your father. Don't worry about it.

Stephen G :

If you were to get an inquiry, just tell them where he is & he isn't required to file.

Stephen G :

If he were my Dad, that's what I'd do.

Customer:

HAHAHAHA...so true...thanks, XXXXX XXXXX answered my questions that have been looming over my head for a while

Stephen G :

But that doesn't make it right;

Customer:

oh..I know. Loking into Nursing Homes was another nightmare...we were very fortuante to have this caregiver take him in...and he knows her and he;s doing great.

Customer:

he lives about 3 hours from us

Stephen G :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Again, please remember to rate my response. Bonuses, where you think they are warranted, and excellent ratings, are always most appreciated. Thanks again for using JustAnswer.com.

You may get a short survey from the site; if it isn't too much trouble please answer it; thanks, SEG

Customer:

sure will..thanks again

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