Taxable Income?

[GTS1101]

I have a client who is receiving money to take care of her husband who is on workers compensation. The company that is handling the husband's workers compensation claim is paying the wife $960 a month to take care of her husband. They told her it is her responsibility to pay the taxes as she will not receive a W-2 or 1099. The problem is when the checks come to them they come in the husband's name but to pay the wife for her services. I am not sure why it comes in the husband's name she said that is the way the workers comp people do it. If the check is not in her name I would assume she would still report this as income because it is for her services as the husband is on workers comp? Any suggestions?

Thanks!

GTS1101

[Fuzzy Faced Leader]

I don't understand. Why would the wife get paid for taking care of her husband? Wouldn't she take care of him, if she wasn't getting paid? Workman's compensation income is not taxable, which is why no 1099 is issued. Thus, payments to the husband is tax free. I f he gives it to his wife, to help with his support, it is joint income, also not subject to taxation. If she wants to put it on her return as income fine, but he can deduct it as paid care giver fees, and he he has to withhold, and give her a W-2.

[scottax]

gut feeling

If the workers comp checks have his name on them, then he is the recipient and can spend the non-reportable income as he chooses. The wife has no need to report the fact that she is helping her husband spend his income. Spouses do it all the time.

[Davc]

The WC settlement undoubtedly included reimbursement for care up to $960 a month. Is the wife required to document receipt of the money for the WC provider?