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I assist my 95 year old aunt who pays me, tax consequence?

My aunt has been legally blind and lives in a retirement home that provides meals and cleaning. I help here daily with everything else and she pays me monthly. Is there a tax law that would make my pay deductible. She pays me more than the gift allowance each year. I am also one of the exectutors of her estate.
Status: Open    Jul 25, 2016 - 06:31 AM

Elder Law, Finance

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Expert Answers

Jul 27, 2016 - 08:55 AM

There is no deduction available to her for these payments. In addition, your receipt of these funds is taxable earned income that should be reported. If you wanted to avoid tax consequences you would have to get creative and also delay the benefit. For example, your Aunt could leave you a bequest in her Will. That bequest would be income tax free. However, you would obviously have to wait to receive it.

Jul 27, 2016 - 09:10 AM

Yes. There are IRS tax consequences. It sounds like you may be what is called a Household Employee. I typically advise my clients in similar situations to consult with a licensed CPA who can help them through the process of how this needs to be reported.
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