Mom is about to move in with me. I have a child and a full-time job. It would be over $3000 a month to hire a nurse to come in just for my working hours and care for her. It was suggested that I decrease my work hours and supplement my income with her savings so that I instead could be her primary caregiver. Is that legal and ethical? Would I then have to keep track and claim it as income for taxes?
If your Mom is no longer competent, then NO it is NEITHER legal NOR ethical for you to make these decisions to "pay yourself" with her money. If you are not her POA then you have no power to do so and if you ARE her POA then you have a legal fiduciary responsibility not to enrich yourself off your Mom. Money coming from your Mom would be considered by the federal government as "gifting". It would have consequences that are absolutely DIRE if Mom ever needed placement care of Medicaid help. Moreover it would be a POA enriching himself, which is against the law.
So that is in the case of a mom who is no longer competent in her own decisions.
Now on to if Mom IS competent. If she is and she wishes to pay you in any amount then you BOTH head to an elder law attorney. If you are paid as shared living expenses this isn't money you are taxed on. If not, then taxes and contracts are involved and you need legal financial advice. You and your Mom could draw up a care contract plus a shared living expenses contract. If you Mom can afford this it is a good idea while it works for you both, and the time to reassess that is about every 6 months.
Good luck. Let us know what works for you and your Mom.
But I was a middle aged woman and wasn't responsible for a child, plus I knew that mom's considerable estate would mean I wasn't left penniless in the future (although having a little more money in my pension fund would have been nice). To me the ethical issue doesn't have anything to do with your mom, it is about your life revolving around your mom when you still have a child at home who should be your main focus.
Is there anything ethical about the state of the U.S. healthcare system?
$17,000 is the annual gift tax exclusion for 2023. This is the maximum amount you can give a single person without reporting it to the IRS. If she gifts you and your child $17,000 each in 2023, it would come out to around 2833.00 per month. You will want to make sure that mom is okay with treating it as gifting over the year.
There are also shared expenses since she is living with you: water, electricity, etc.
The problem is that you are not contributing social security taxes, so your social security check will be smaller when you reach retirement age.
You could hire a lawyer and set up an employment contract so you continue to contribute to your social security and medicare.
Social Security is not meant to be your main source of income in retirement. And if it is your main source of income, you have failed to execute during your working years.
There may come a time when you can no longer meet her needs with in home care. If she can’t afford facility care, she will likely need to apply for Medicaid. Medicaid will review probably five years of records looking for gifts, which would disqualify her from getting help for a period of time.
If you are getting pad for doing work, it’s probably better to pay the taxes. As said above, your SS retirement income will benefit.
Also as said above, see an elder law lawyer about a care contract. If it’s not too late, ask about POA and other Medicaid and estate planning advice as well.
If you don't pay them, there can be problems down the road. For instance, Social Security retirement benefits are based on how much you have earned in your working life. The more you contribute, the more you get later.
You need health insurance for yourself and your child. If you get it through your present full-time job, and if you don't have that job or work fewer hours, you may not have insurance. Consider catastrophic events for you and your child. How would you pay for the health care you need if you don't have insurance? If you have a retirement plan at work, can you still contribute if you work part time?
If you are with mom being her caregiver, you won't have the same social contacts. You might as well say goodbye to your present recreational pastimes. You didn't say what her health issue is, but if she requires a nurse when you're away, that tells me that she could get a lot worse and need more care. Care would be up to you. It doesn't come naturally; some of it requires specialized training.
Working and caring for a sick parent is exhausting in a way you never could imagine. Your child will not be the center of your attention - mom will. Your child will be exposed to all the aspects of a sick person in the house - odors, noises, paraphernalia, emergencies in the night.
Having a sick parent move in is almost never a good decision. You're taking on a lot. I wish you luck.
If you are going to do this, have a lawyer draw up a caregiver contract. Make sure you provide for FICA/SS/taxes to be paid. Make sure that days off, vacations and respite are written into the contract. Your mom will need to agree that people other than you will provide her care. Otherwise, no deal.
Also, please read this before you take this perhaps ill-advised step:
https://www.agingcare.com/discussions/if-you-are-going-to-become-a-caregiver-480769.htm?orderby=oldest