Support Test, is this right?

[Kram BergGold]

I just read in Lasser's that Medicaid paid to a nursing home is not considered for the support test when testing to see if someone is a dependent. It said the IRS contended the opposite but the Tax Court disagreed. I have a client whose mother is in a nursing home. The mother's SS goes to the nursing home and Medicaid picks up the rest. So if my client pays bills of her mother's in excess of SS received then the mother is a dependent?

[New York Enrolled Agent]

I just read in Lasser's that Medicaid paid to a nursing home is not considered for the support test when testing to see if someone is a dependent. It said the IRS contended the opposite but the Tax Court disagreed. I have a client whose mother is in a nursing home. The mother's SS goes to the nursing home and Medicaid picks up the rest. So if my client pays bills of her mother's in excess of SS received then the mother is a dependent?

Take a look at Archer 73 T.C. 963

[dyne]

Back prior to 1976 when I worked for 22 years as an IRS Tax Auditor I disallowed many
claimed dependents, but I allowed almost as many also. It always seemed the social
security benefits came out close to being half of the dependent's support. The actual
dependent's support is difficult to calculate and most people do not keep a record of these
expenses. So it is really guesswork. NOW, I tend to allow such people as a
dependent. In your case I would allow it.

[JG EA]

Did not hear about it, but that doesn't seem right. Medicaid can be very big numbers. I would not have even considered someone a dependent when thousands of dollars over the patient's Social Security are paid by this third party. What then would be the money spent by the family?

Although I have heard about nursing homes that charge more than Medicaid will pay and they make the family pay.

[dan doshan]

I would tend to agree that medical care paid by medicaid would be part of total support. I cannot for the life of me understand why it would not. Other than in the case of a qualifying child where it would not be considered support provided by the child.

[dan doshan]

So if my client pays bills of her mother's in excess of SS received then the mother is a dependent?

Also could you clarify the above statement. If Mom receives 10K in SS and client pays an additional 5K in addition to that, is that what you are saying. Or are you implying that the client then pays an additional 10K plus over and above Mom's SS. Implying that mom's total support, excluding medicaid, is 21,000K and client pays 11K of it.

Note that the pub does mention state aid, food stamps, welfare benefits, housing assistance, etc. are to be included in total support. I don't see why Medicaid would not fall into such category.