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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29581
Experience:  Taxes, Immigration, Labor Relations
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I am a retired nurse who is a 24-hr caregiver mother. My SS

Customer Question

I am a retired nurse who is a 24-hr caregiver for my mother. My SS is very limited. My mother has applied to a veterans program for monies to give extra care but to receive that her money must be 'paid' to me. That money still must be used to pay bills, taxes and insurance on mother's home and I will benefit by living there. How do I include this money on my taxes? I receive health insurance based on my income through the subsidies program. Will this money affect that?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

There are two types of payments that are excluded form income tax.

- providing care to qualified foster individuals AND difficulty-of-care payments.

Difficulty-of-care payments. These are additional payments that are designated by the payer as compensation the additional care that is required , mentally, or emotionally handicapped qualified foster individuals. A state must determine that the additional compensation is needed, and the care the payments are made must be provided in your home.

So far - based on your information - compensation you are receiving does qualify.

Please communicate with the payer and verify that such payments would not be reported to the IRS as taxable.

If they do report - you would need to report that amount on your tax return and claim an adjustment according with

Correspondingly - these payments will NOT be included into your taxable income and will not affect your qualification for the health insurance subsidy.

Expert:  Lev replied 1 year ago.

Previously IRS held position that such income is NOT taxable if the taxpayer cares for the no related person and taxable if that person is related to the taxpayer.

HOWEVER - not long ago - the IRS changed that position

see here -

This notice provides that certain payments received by an individual care provider under programs, described in this notice, are difficulty of care payments excludable from gross income under section 131 of the Internal Revenue Code.

This notice is effective received on or after January 3, 2014.

Does that answered your question?

Expert:  Lev replied 1 year ago.

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