interesting situation

[oceanlovin'ea]

Client had a spinal cord injury several years ago from a skiing accident. Even though he can walk (with difficulty) and he can use his hands but because he can't do certain functions he is considered a quadraplegic.
He can hire someone to come in and help him with daily functions such as dressing, eating, etc. His wife is an occupational therapist. So she is professionally qualified to perform the tasks he needs done each day. She will earn around $1000 per month for this service.

Because it is a medical need and ordered by the doctor and approved by the state, it would qualify as a medical deduction.
So they can deduct the payments and she will include the payments in income and pay SE tax on it.

Very strange!

Linda

[Burke]

Why would she want to do this unless she wants SS credit? She is going to report more income than they can deduct as medical, plus FICA.

[oceanlovin'ea]

Probably because he needs the help on a daily basis, she is qualified to give it to him and maybe they don't want another person coming into the home every day. It is helping with dressing, doing some exercises with him every day, etc.

You come across new situations every year. This year I have had several whoppers. But that is how we learn so guess we shouldn't complain.

Linda

[ChEAr$]

. His wife is an occupational therapist. So she is professionally qualified to perform the tasks he needs done each day. She will earn around $1000 per month for this service.


Linda

Very strange indeed. I always thought a wife's duty was to take care of the husband,
(and vice versa) without getting paid for it.

[Burke]

Probably because he needs the help on a daily basis, she is qualified to give it to him and maybe they don't want another person coming into the home every day. It is helping with dressing, doing some exercises with him every day, etc.
You come across new situations every year. This year I have had several whoppers. But that is how we learn so guess we shouldn't complain.
Linda

I didn't mean why did she want to do the job. I meant why did she want to be paid for it. Think of the paperwork for no benefit. W-2's, 941's, 940, state unemployment forms. They lose 7.5% of the cost when itemizing, she has to report all the income.

[Jesse]

Not an answer - but for more discussion

I think it's a third party paying - some type of court settlement?

I had a similar case years ago in which Mom was paid to take care of disabled son. NATP research answered that income was subject to self employment but I later came upon a similar case that court ruled it was not subject to SE tax. Mom was fine with her Social Security contribution so we left it as subject to SE tax.

Did not worry about the medical issue as it was not enough to itemize after the 7.5% haircut and no mortgage interest or charitable deductions.