Any New York tax preparers?

[ttbtaxes]

A client's mom is in a nursing home which they pay for with private funds. The nursing home charged them over $10,000 for a NYS Assessment Tax. It looks like that is calculated at 6.8% and the mom (taxpayer) can apply for a refundable credit at the rate of 6% using Form IT-258. That amounts to almost $9,000 refundable credit.

Is this correct?

[New York Enrolled Agent]

A client's mom is in a nursing home which they pay for with private funds. The nursing home charged them over $10,000 for a NYS Assessment Tax. It looks like that is calculated at 6.8% and the mom (taxpayer) can apply for a refundable credit at the rate of 6% using Form IT-258. That amounts to almost $9,000 refundable credit.

Is this correct?

The IT-258 is used and provides 6% of the assessment paid by the nursing home. Where are you getting $9K as the credit amount? 6% of $10K = $600 - do I miss something?

[Grace]

Not 6% of the "assessment." NYS assessment tax is 6.8%, but taxpayer can only claim 6% of that amount. For example, if taxpayer paid the NH $12,000 for one month, NYS assessment tax would be $816 (6.8% of the $12k) the taxpayer computes the credit based on 6% making the credit $720. If this was for an entire year, 12 x $12k = $144,00, then NYS Assessment tax would be $9,792, but the taxpayer's credit would be $8,640 (6%). I have done a number of these with only one audit by NYS which resulted in no change to the credit computation.

[ttbtaxes]

I think the nursing home cost for 2018 was ~$160,000 including the Assessment Fee of ~$10,000. If the $ 10,000 is 6.8% then 6% is ~ $8,800.

It seems odd that long-term care payments covered the entire nursing home bill so the taxpayer/mom is not out of pocket, yet she gets an $8,800 refund for the 6% credit and refund on her NYS return.

Can that be right?

[Grace]

I think the nursing home cost for 2018 was ~$160,000 including the Assessment Fee of ~$10,000. If the $ 10,000 is 6.8% then 6% is ~ $8,800.

It seems odd that long-term care payments covered the entire nursing home bill so the taxpayer/mom is not out of pocket, yet she gets an $8,800 refund for the 6% credit and refund on her NYS return.

Can that be right?

Yes, I have had client's that paid the Nursing Home via a LTC insurance and still got the credit. Also, when I prepare one of these credit forms I have the client obtain a printout from the nursing facility, not only showing a summary of the NYS assessments, but also the cost of room and board by month. That way I have all the back-up of my calculations and am ready to respond to NYS inquiries without chasing down the information after the fact.

[New York Enrolled Agent]

I think the nursing home cost for 2018 was ~$160,000 including the Assessment Fee of ~$10,000. If the $ 10,000 is 6.8% then 6% is ~ $8,800.

It seems odd that long-term care payments covered the entire nursing home bill so the taxpayer/mom is not out of pocket, yet she gets an $8,800 refund for the 6% credit and refund on her NYS return.

Can that be right?

You only get the credit on the assessment levied on the nursing home and passed on to the patient. You only get 6% of the assessment not the cost of the nursing home care. NY is not giving a credit for the ordinary cost of care. Look at the form and see where assessment is in bold.

[ttbtaxes]

NYEA - Grace and I are coming up with the same numbers but it sounds like you are coming up with numbers that are 1/10 of ours. Let's assume Grace's number of $12,000 nursing home cost/month and they add on the 6.8% of the Assessment tax. 6.8% of $12,000 = $816. The taxpayer can't claim the full credit but can claim it at the rate of 6% rather than 6.8% making the credit that month of $720. Therefore, for the entire year, the credit would be $720 x 12 = $8,640.

Are you saying the credit should be Assesssment tax levied of $816 x 12 = 9,792 x 6% = $587.52 for the year rather than the $8,640 we've come up with?

[New York Enrolled Agent]

NYEA - Grace and I are coming up with the same numbers but it sounds like you are coming up with numbers that are 1/10 of ours. Let's assume Grace's number of $12,000 nursing home cost/month and they add on the 6.8% of the Assessment tax. 6.8% of $12,000 = $816. The taxpayer can't claim the full credit but can claim it at the rate of 6% rather than 6.8% making the credit that month of $720. Therefore, for the entire year, the credit would be $720 x 12 = $8,640.

Are you saying the credit should be Assesssment tax levied of $816 x 12 = 9,792 x 6% = $587.52 for the year rather than the $8,640 we've come up with?

With all due respect to Grace, the numbers are not correct. I advised you to look at the form - perhaps you did not but I'm pasting what the form says. Note the bold is from NYS and not me.

Enter the 6% base-rate portion of the assessment (not expenses) imposed on a New York residential health care facility and paid directly by you during this tax year

[ttbtaxes]

NYEA, I think that's exactly what we've done. In my example in post #7, the 6.8% rate equals $816/month. The 6% base-rate portion of the assessment is 6.0/6.8 x $816 = $720/month or $8,640 annually.

[New York Enrolled Agent]

Didn't you say the assessment was $10,000? 6% of $10,000 = ??????

https://www.tax.ny.gov/pit/credits/nursing_home_assessment_credit.htm

[Will]

TTB, you and Grace are correct. I have done many of these. The wording is confusing, but the end result is nearly all of the assessment is refunded. The assessment is 6.8% of the total paid. The credit is 6% of the total paid. So, the refundable credit is about 88% of the assessment.

[ttbtaxes]

I just read TSB-M-06(1)(I) dated January 25, 2006. That is around the time the law came into existence. It specifically states, "For tax years beginning on or after January 1, 2005, New York State allows a personal income tax credit for the portion of the assessment imposed on a residential health care facility (nursing home) pursuant to Public Health Law section 2807-d(2)(b) that is passed through to a private-pay resident of the nursing home. The amount of the credit is equal to the total portion of the assessment that is passed through and directly paid by an individual during the year (e.g., the total portion paid during 2005.) The portion must be separately stated and accounted for on the billing statements or other statements provided to a resident of a nursing home, and must be paid directly by the individual claiming the credit."

"An individual may claim the full credit even though the resident may be receiving benefits from a long-term insurance policy. If a resident assigns his or her long-term insurance benefits to a nursing home, the resident is treated as having paid that amount towards the total nursing home bill."

I believe back in 2006 the assessment tax was only 6.0'%. As this TSB indicates, the full amount of the assessment passed through (billed to and paid by) to the private-pay resident can be claimed as a credit. Now, only 6.0 of the 6.8 can be claimed rather than the full amount.

Does anyone read this differently? To access this TSB go to NYS Tax Department website and enter the full TSB # in the search box on the top right.

[Will]

Exactly correct. Finish the return, no more discussion needed. As I said, i’ve done at least 30 of these, and have never had a question.