civil service pension and nursing home

[oceanlovin'ea]

When an elderly person on social security goes in a nursing home, the nursing home gets their check. Since it is social security and there is not other income, there is nothing to worry about with taxes.
But if a person has been receiving a civil service pension instead of social security (or with a very small amount of social security) that is taxable and they go into a nursing home, how is that handled? The nursing home gets everything except what is taken from pension for her medical and dental insurance and $105 a month for personal items. She will still get a 1099R from civil service. Should she continue to do a schedule A and the amount that the nursing home gets of her money be a medical deduction?

A little different situation because the civil service pension replaces social security and is taxable. thanks for the help.

Linda, EA

[taxea]

Sch A medical expenses for the payment to the nursing home.

[FEDUKE404]

Income vs deduction

Sounds like there is income to report, and then worry about what happens when you fill out Schedule A medical expenses.

FWIW: The amount "the nursing home gets of her money" is not automatically a qualifying medical deduction.

FE

[dkss]

I have a client who is in the same situation (my mother in law is her POA). The nursing home keeps telling my mother in law that the pension is not taxable. Yet, they cannot back the statement up with any concrete information. My research at the time could not find anything to substantiate the nursing homes stance. My research also found a few articles (i know not authoritative in itself) supporting my stance that it was taxable. I printed those articles out and gave to my mother in law to give to the nursing home. They still are adamant that I am wrong. I did not keep a copy of the articles, and I do not have time to research it again at this time.

I hope someone else can add to our knowledge for this situation.

[Burke]

The civil service pension is taxable, and payments to the nursing home for medical expenses are deductible on Sche A.

[ttbtaxes]

Sounds like there is income to report, and then worry about what happens when you fill out Schedule A medical expenses.

FWIW: The amount "the nursing home gets of her money" is not automatically a qualifying medical deduction.

FE

Other than ancillary reimbursements, or certain mandated taxes (NYS), when would a payment to a nursing home on behalf of a resident not be deductible?

[TAXNJ]

I have a client who is in the same situation (my mother in law is her POA). The nursing home keeps telling my mother in law that the pension is not taxable. Yet, they cannot back the statement up with any concrete information. My research at the time could not find anything to substantiate the nursing homes stance. My research also found a few articles (i know not authoritative in itself) supporting my stance that it was taxable. I printed those articles out and gave to my mother in law to give to the nursing home. They still are adamant that I am wrong. I did not keep a copy of the articles, and I do not have time to research it again at this time.

I hope someone else can add to our knowledge for this situation.

Start with publication 721

[FEDUKE404]

Payments are going where?

Other than ancillary reimbursements, or certain mandated taxes (NYS), when would a payment to a nursing home on behalf of a resident not be deductible?

Depends upon what is really being discussed: "retirement facility" or "nursing home" or "assisted living facility"

I have no earthly idea what you are referring to re NYS along the lines of "mandated taxes" and/or "ancillary expenses."

A person in the end stages of Alzheimer's and in an assisted living facility can deduct a heck of a lot more as a "medical expense" than can a reasonably healthy older individual living in a retirement facility with a golf course in the back yard.

But to answer your question: Things that come to mind that would be billed by the "nursing home" might include personal services such as beauty shop charges, entertainment costs, expenses for "outings" (travel/tickets to see an on-stage performance), cable/internet charges, and I'm sure many more. Perhaps things under the broad umbrella of "discretionary expenses"??

The original post here seemed to imply that one could simply "sign over" certain income benefits (gross ? / net ?) to the retirement facility and then presto digito there was no income to declare and everything became (by default) a 100% Schedule A medical deduction. I have a very hard time swallowing that concept.

Have a good one.

FE

[taxea]

Sounds like there is income to report, and then worry about what happens when you fill out Schedule A medical expenses.

FWIW: The amount "the nursing home gets of her money" is not automatically a qualifying medical deduction.

FE

That it goes directly to the nursing home does not negate the fact that the income is reportable as hers and the portion that qualifies as medical expense goes on Sch A.

[oceanlovin'ea]

more facts

She is in a nursing home, lock down unit because she is an Alzheimer's patient.

The civil service pension has always been taxable and I know that it still is. I wasn't suggesting that it wasn't. But it does go directly to nursing home and she gets $105 per month for personal expenses. That is for pull ups, etc.

I guess they will have to get statement from nursing home to know exact figures.

Linda, EA

[FEDUKE404]

Why do funds go to care giver?

She is in a nursing home, lock down unit because she is an Alzheimer's patient.

The civil service pension has always been taxable and I know that it still is. I wasn't suggesting that it wasn't. But it does go directly to nursing home and she gets $105 per month for personal expenses. That is for pull ups, etc.

I guess they will have to get statement from nursing home to know exact figures.

Linda, EA

This whole arrangement intrigues me. . .

From a tax standpoint, where the money for Alz care comes from is. . .irrelevant??

Whose idea (requirement?) is it, in the first place, for retirement funds of whatever type to go directly to the care provider? Are they doing the same thing with her Social Security benefits?

FE

[TAXNJ]

In general (very general)

This whole arrangement intrigues me. . .

From a tax standpoint, where the money for Alz care comes from is. . .irrelevant??

Whose idea (requirement?) is it, in the first place, for retirement funds of whatever type to go directly to the care provider? Are they doing the same thing with her Social Security benefits?

FE

In general, and as you may know, depending on the person's financial situation when entering the Nursing Home, in some cases, when the person no longer can "private pay" the Nursing Home cost, the resident's State and working with the Medicaid rules may become Representative Payee of your finances (not saying this is the case in this Post).

If you qualify, (where you ran out of private funds, etc) Medicaid may pick up all the nursing home expenses over and above your monthly income. As you know, Medicaid isn't free. So, Medicaid wants to be repaid whenever they can from wherever they can. Each state is different on how it is handled.

Again, it depends on the person's financial situation when entering the Nursing Home, length of stay and it is very important to know how it works in the state the person is a resident.

Bottom line is Tax Planning is very important before something such as going into a nursing home. Elder Care Attorneys are specialists in providing the planning which can be expensive but in the long run may protect (save) most of the person's Assets if such care is needed in the future.

It is a very difficult conversation and even to mention to clients ifor planning to prepare in case something like this happens. Its like asking young couples if they have a "will" since they now purchased a home and starting a family. Some will get a will and others will wait!