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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10173
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My husband is ill with esrd, and metastaic lung, liver, bone

Customer Question

My husband is ill with esrd, and metastaic lung, liver, bone and brain cancer. My 45 yr old son was self employed in florida but left in July 2014 to come up here and live with me to help as I am 78 yrs old and had been taking care of my husband for the last 4 years. I pay him to help me $250.00 a week and he lives with us. Of course this does put a strain on finances and I have had to take more money out of our retirement funds than is necessary. Can I claim him or any of the money I give him. We live in PA, which does give him his health insurance.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University's Stetson School of Business and Economics, as well as CFP and CRPS designations.

I can help here

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Yes, this can be done, but it comes with some things that must be done administratively so that you are tax compliant.

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Essentially what you'd be doing is making the person a household employee but SINCE the "employee" is a family member you don't have to pay the payroll taxes that normally come along with that arrangement.

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See this from IRS:

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" If the caregiver employee is a family member, the employer will not owe employment taxes even though the employer needs to report the caregiver's compensation on a Form W-2. "

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Also, if he is engaged in other business or employment and he is able to set the times and ways in which he helps, then he can be considered an independent contractor and simply provide a 1099-MISC at the end of the year.

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Either way, of course, he will have to report the income.

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You may find this helpful:

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https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Family-Caregivers-and-Self-Employment-Tax

Expert:  Lane replied 1 year ago.

You can then use these expenses along with other medical expenses (over 75% of AGI for someone your age, 10% for others and this will change in 2017) as a medical expense deduction of your schedule A

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Please let me know if you have questions

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Lane

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