Dependent Care

[lwh1961]

My 89 year old aunt moved in with me last year after she fell and broke her hip. I am paying nearly $1500 a month for someone to take care of her while I go to work. She can't stay by her self. I am able to claim her on my tax return as a dependent for 2009. She only gets social security and most of that goes towards her medicine. She does give me $400 a month towards living expenses.

This (net) $1100 is probably what will allow me to qualify for a 7 vs. a 13. I can't see why I won't be allowed to claim it except for the fact that I pay cash under the table. Do you think that will matter?

Thanks

[forgotten]

This (net) $1100 is probably what will allow me to qualify for a 7 vs. a 13. I can't see why I won't be allowed to claim it except for the fact that I pay cash under the table. Do you think that will matter?

Thanks

You would be admitting to tax evasion, under oath in a court of law. Just something to think about...

If you paid your aunts carekeeper more than $1,700 in 2009 then she was a household employee and you needed to issue a W2 and pay employment taxes.

[newbie2]

$1100 per month paying for an elderly relatives care is surely going to raise the eyebrow of a bk trustee. I'd be willing to bet they're going to want to see receipts and also a breakdown of your aunts income vs expenses.
I would imagine if you were audited the IRS would also want to see receipts.

We went through this ourselves (paying for an elderly parents needs) and it was disallowed. Completely disallowed.

Not that it helps you with your bk, but have you looked in to SS paying for her health needs (her in home care or nursing home care)?

[Flamingo]

You need to consult with an Elder Care lawyer and I would do so as soon as possible for your benefit and the benefit/protection of your Aunt. It will be the best lawyer consultation you will ever have.

[lwh1961]

[QUOTE=forgotten;385915]You would be admitting to tax evasion, under oath in a court of law. Just something to think about...

I had not thought about that...but it surely is something to think about.

[lwh1961]

You need to consult with an Elder Care lawyer and I would do so as soon as possible for your benefit and the benefit/protection of your Aunt. It will be the best lawyer consultation you will ever have.

What does an Elder Care lawyer do?

[DeadManCrawling]

$1100 per month paying for an elderly relatives care is surely going to raise the eyebrow of a bk trustee. I'd be willing to bet they're going to want to see receipts and also a breakdown of your aunts income vs expenses.
I would imagine if you were audited the IRS would also want to see receipts.

We went through this ourselves (paying for an elderly parents needs) and it was disallowed. Completely disallowed.

Not that it helps you with your bk, but have you looked in to SS paying for her health needs (her in home care or nursing home care)?

In your case, did the elderly relative(s) live with you, in their own home, or in a care facility? I wonder if there is a difference for BK purposes. Seems there should be.

[newbie2]

Deadmancrawling, she lived with us and continued to do so for another year in to our plan. We scraped money out of our grocery budget and everywhere else that we could to help with her needs. It didn't make a bit of difference to our trustee that she lived with us. Sadly we didn't have the energy to fight him on it.

[DeadManCrawling]

I'm sorry to hear it newbie.

It seems inherently wrong that such expenses are simply disregarded. Pretending such expenses do not exist doesn't make them disappear.

What the heck is wrong with our system? How is it legal or moral to encourage abandonment of our elders in the time when they need us most?

Discouraging to learn such things.

[newbie2]

I think part of the problem was she had only been living with us for about 8 months before we filed, and also we were one of the early "new law" filers. Our attorney just shrugged his shoulders and didn't want to fight it, the trustee was firm about it, and we caved because we didn't know any better.

I don't know if things have changed in the eyes of the trustees, but I think the OP should be very careful about claiming $1100 in expenses for her elderly aunts care and having that alone be the determining factor for being able to stay in a chapter 7.

LWH1961, I apologize if I got off track with your question.

[lwh1961]

I think part of the problem was she had only been living with us for about 8 months before we filed, and also we were one of the early "new law" filers. Our attorney just shrugged his shoulders and didn't want to fight it, the trustee was firm about it, and we caved because we didn't know any better.

I don't know if things have changed in the eyes of the trustees, but I think the OP should be very careful about claiming $1100 in expenses for her elderly aunts care and having that alone be the determining factor for being able to stay in a chapter 7.

LWH1961, I apologize if I got off track with your question.

The more conversation we have about it the better off I am. But I agree I need to be very careful. It's not the only thing keeping me from a 7, I can make it without it but just barely.

[BCA2009]

I see two seperate issues here.

1) Can you count the elder care expenses for filing Chap 7.

2) How will not paying FICA/Medicare to the caregiver effect the Chap 7

You indicated that you included her as a dependent, so I would assume that you could include those as legitamate expenses. But you would need to consult with attorney in your district about that. If you paid "under the table" you would have to have some kind of proof that money went to eldercare.

Assuming you can prove that the funds went to eldercare and your district will allow those expenses in general. I would not let a few hundred dollars in FICA medicare and/or failure to submit W-2/1099, stop you from filing BK.

You could amend your return and include the taxes, or let it ride and see what happens. Even if the IRS finds out, they will just send you a bill and possible fine. If they prosecuted everybody that omitted filing taxes on domestic help, there would be a huge logjam in tax court. You may not be able to run for govenor or be confirmed to the supreme court, but I wouldn't worry much past that.

I think your harder problem is going to be proving you spent the money on heathcare unless you paid with a check.

good luck!

[AngelinaCat]

I'm sorry to hear it newbie.

It seems inherently wrong that such expenses are simply disregarded. Pretending such expenses do not exist doesn't make them disappear.

What the heck is wrong with our system? How is it legal or moral to encourage abandonment of our elders in the time when they need us most?

Discouraging to learn such things.

Yet, I remember a few months back a couple sending money back to the Philippines (the wife's home country) to help with the care of her elderly parents. A poster, I do not remember who it was, said there was a provision in the BK law that would cover it. I will have to research...

[lwh1961]

I see two seperate issues here.

1) Can you count the elder care expenses for filing Chap 7.

2) How will not paying FICA/Medicare to the caregiver effect the Chap 7

You indicated that you included her as a dependent, so I would assume that you could include those as legitamate expenses. But you would need to consult with attorney in your district about that. If you paid "under the table" you would have to have some kind of proof that money went to eldercare.

Assuming you can prove that the funds went to eldercare and your district will allow those expenses in general. I would not let a few hundred dollars in FICA medicare and/or failure to submit W-2/1099, stop you from filing BK.

You could amend your return and include the taxes, or let it ride and see what happens. Even if the IRS finds out, they will just send you a bill and possible fine. If they prosecuted everybody that omitted filing taxes on domestic help, there would be a huge logjam in tax court. You may not be able to run for govenor or be confirmed to the supreme court, but I wouldn't worry much past that.

I think your harder problem is going to be proving you spent the money on heathcare unless you paid with a check.

good luck!

I have several months before I can file anyway. I need to get some time between some transactions. I could proabbly structure the payments so I could prove them. I might even be able to talk to her into letting me doing it correctly. I know I really need to speak with an attorney so I can see where I'm at realistically.

[AngelinaCat]

Here is the thread. The poster I was referring to is Justbroke:

http://www.bkforum.com/showthread.php?t=49540&highlight=sending+money+phillipines

Good luck to you and your aunt.