How much money is fair for my mom with Alzheimer's to contribute to our household?
My question is how much money is fair for my mother to contribute to our household? She has moderate-late Alzheimer's Disease and cannot be alone. She has lived with my husband and I for one year. I work from home and care for her 24/7. She receives $1200 per month from SSA and has no other income or assets. I am her POA and also Representative Payee for her SSA. She cannot understand or agree to any figures so I would like to ask Caring.com for help determining how much of her $1200/month should go to household expenses. Is it fair to charge rent and, if so, how much? SSA is no help although they will require an annual statement of how I have used her money. Thank you.
Since you provide room and board and 24/7 care, you are entitled to be paid for your services.You can look in the classifieds to see how much an apartment rents for in your area. You can figure out how much extra you spend on food and other staples. You can pay yourself a resonable hourly or weekly wage. Check with an agency to find out what the going rate is for a caregiver. You should charge less than the agency because you are not out to make a profit and you don't have the overhead that a business does. I am sure these expenses will exceed $1,200/month. Be sure to carefully document these expenses, especially the care giving. You should list the services that you are providing and the amount of time you spend on each. A daily or weekly diary is a good idea.
Would the rent portion of the contribution be considered rental income? Would the hourly wage be considered Fed and State income therefor taxable for the caregiver? What about other normal paycheck deductions like Social Security?
What would one do in the situation that the parent doesn't have enough income/cash to cover the monthly expense, but owns a home?
Yes, the rent is counted as rental income and the pay is taxable. Since you are directing your own activities with regard to caring for your mother, you can get paid as an independent contractor rather than an employee. Then it is up to you to decide how much to withhold depending on your tax situation. Instead of a W-2 with regular deductions, you will get a 1099 at the end of the year. If you will owe taxes, you'll need to make estimated payments quarterly. This gives you more flexibility and less administration.
If your mother lived in her home, she may be eligible for a reverse mortgage which could help pay for her care. In your case, it sounds like the house is empty, so this is not an option. If you are looking for future reimbursment, you can draw up a contract stating that you will be reimbursed for the services you provided based on a specified formula or flat amount. The reimbursement will come from the proceeds of the house when it is sold. As POA, you can sign for your mother.
From Anonymous #2
Where would the 1099 come from if this financial transaction is within the family?
You are correct, the house is empty and has been for sale for 16 months. We have had a contract for personal care for 4 years, but it's not doing us any good as there is little left after house expenses from the empty house.
The most difficult question is how will filing for Medicaid deal with this legal personal care contract and getting payment when the house sells? Will mom be able to qualify after most of the value of the home is used to satisfy the contract?
My question is can you claim your mom on your taxes because she is living in your household and still get some pay or services?
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