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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2995
Experience:  IRS licensed Enrolled Agent and tax instructor
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My mother passed away in 2013 and was receiving social security

Customer Question

My mother passed away in 2013 and was receiving social security benefits (age 88). She was residing at a nursing home and thru Texas State Medicaid, they applied 90% of her SSA benefits to payment of the nursing home monthly. However the last 3 months prior to her death the nursing home had not received any payment. After her death I contacted SSA as her sole survivor and they sent me the amount due my mother and I in turn paid what was owed to the nursing home. They made a direct deposit into my bank account and of course reported to IRS the amount paid to me. I did not receive a 1099 for filing tax purposes. Recently I received an IRS letter stating I had not reported the amount and that I owed back taxes on it. Can I appeal this and show proof that I paid the amount to the nursing home because through Medicaid oversight, they had not been paying the nursing home?
Submitted: 2 years ago.
Category: Tax
Expert:  emc011075 replied 2 years ago.
Hi. My name is ***** ***** I will be happy to help you.
Don't shoot the messenger here, it is the income and the way it was received, not what it was used for that makes IRS believe it is taxable.
Your mother didn't have to pay taxes on it because she was most likely bellow the filing threshold, not because it was used to pay her nursing home.
If you didn't receive 1099, get your IRS transcript to find out how the income was reported to IRS (1099SSA or 1099Misc). Than you have to talk to Medicare. If the income was due to your mother, it should had been sent to your mother's estate, not to you. And the balance due for the nursing home should had been paid out of the estate, not by you. You will most likely need to get corrected 1099 (whatever it was) to prove to IRS that the income was not meant for you, it was meant for your mother.
You can get your transcript here: (tax return and account transaction/billing transcript))
You are looking for wages and Income transcript, so you will have to use form 4506-T to get it:
Once you get this corrected, than you can challenge IRS. Again, it is not what the income was used for, but how it was distributed that makes it taxable or nontaxable.
I wish I had a better news for you.
I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.