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Would this be considered income and have to be reported to IRS? We also heard that she "could" designate a gift of $12,000 a year, true? Is this reportable income to the receipient?

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Definitely look into declaring your mother as an adult dependent and work with an accountant who knows Medicaid law, and perhaps an attorney as well. You should be able to do something here, but you need to be careful because of the Medicaid look back time. Do it all legally and keep good records. Get expert help and it should be okay. Yes, in most instances, $12000 a year can be "gifted" without you being taxed, but again check with an accountant.
Carol
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We declare my mom as a dependent and collect room and board. Less expensive than a NH!!!!! If we didn't, she could not stay with us. We will not go into debt to take care of her!
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Here is what concerns us; If Mother were to enter a nursing facility, and knowing the monthly costs plus sundry expenses, her meger savings would dry up in a hurry. Then....when funeral expenses hit, and hers would be high and she wants to be sent across the country to be buried, it would be up to us to foot the bill. 10-15K is not out of the question. No insurance or any other help is there, just us. Her sisters might kick in but can't depend of that. NO matter how I impress her how important it would be to pre-pay the funeral I just can't get thru. So now you see where the 12K "gift" would help us out. I don't think the "look back" comes into play on a gift, and don't think it is a taxable item.
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My siblings are worthless. Me and my husband care for my Mom. Fortunately my husband retired April 2009 and offered to be the caregiver for my Mom. I pay him, just as I paid my siblings when she was in their care. I pick up the caregiving when I get home from work, and I shower, wash her hair and change her colostomy bag. I do not feel the least bit guilty charging my Mom because she is getting much better care than she would if she was still at my brothers' homes or in a nursing home. I also pay myself too.
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xbassman
Look into the gift. It may be asked back for if and when she goes into a NH and Medicaid has to pay. However, room and board is OK. We do it and could not make ends meet with her expenses if we didn't
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Everyone can gift money to their children -- $12,000 per year to each child. It's the law. However, why couldn't she just share the expenses since she's living in the home, much the same as a roommate would?
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Can you declare your parents as a dependent even though they file taxes also?
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mqflowers
I don't think so, but better ask an accountant. I take money every year and put it into a CD. That way, if she needs it, the money is there, just not in her name.
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Your best solution would be to have an attorney specializing in elder law draw up a "care giver's contract" for you which specifies the amount that would be paid to you and for what reasons it would be paid. By creating a care contract, you are assuring Medicaid that this is a legitimate payment coming from your parent's account and it will not create a problem when they "look back".

It is true that parents are allowed to gift their children $12,000 per year but that only applies to income tax, not Medicaid. Medicaid will count that as a non legitimate expense and your elder parent may not qualify for Medicaid until that $12,000 is repaid.

The money received from your parent MUST be declared but there are usually enough deductions to off-set the increase in income. Keep track of all miles incurred when taking your parent to appointments, etc. Keep track of the amount of space that they are utilizing in your home, etc.

In reality, you are saving your parent money by caring for her and as long as you are putting forth your best effort in caring for her, then you must realize that it is your right not to suffer in doing so. Just make sure you have all your "ducks in a row" so-to-speak.

Shelley
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Sharing expenses is a good thing and believe we will investigate and come up with a equitable monthly room and board fee. That still does not eliminate the baloon note that is looming over us when Mother passes for funeral expenses.
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