How will my aunt's taxes be affected by paying me to be her caregiver?

1 answer | Last updated: Jul 01, 2010
Cat4766 asked...

Hello- I'm in a weird spot. I have been taking care of my aunt for three years now as a live-in caregiver. I have worked another job most of the time but recently lost my job. When I first started doing this she was going to pay me a salary but it never happened. She does pay all the bills, etc. so it's hard for me to ask her if she would pay me. The work has tripled and I was wondering if she DID pay me a salary, could she write that off on her taxes? If it helped her tax wise it might be a good way to bring up a salary again. This is hard because I'm just trying to be a good nephew and take care of her but I do need money of my own! Please help if you know about this.

Thank you

Expert Answers

Steve Weisman hosts the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including WABC in New York City and KRLA in Los Angeles. He is a practicing lawyer specializing in estate planning and is admitted to practice before the United States Supreme Court. He's a public speaker and commentator who has appeared on many radio and television shows throughout the country, and he's the legal editor of Talkers magazine, the preeminent trade publication of talk radio. His latest book is The Truth About Avoiding Scams.

If your aunt's total medical expenses, including any qualifying amounts that are paid to you as a caretaker exceed 7 1/2 percent of her adjusted gross income,she can deduct on her income taxes the amount of her expenses that exceed the 7 1/2 percent base. Amounts paid to you for household help would not qualify as medical expenses. However, amounts paid to you for maintenance or personal care services which have as their primary purpose the providing of a chornically ill individual with needed assistance with her disability can be considered medical expenses if the services are required by your aunt and are done due to a plan prescribed by a licensed health care practitioner. I suggest that you consult with both a geriatric care manager who has nursing skills as well as an accountant to determine how best to qualify your assistance as deductible medical expenses.