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