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| Caregivers often need physical, emotional and financial help. |
A reader recently
wrote: “Our daughter is on disability and
has been for several years. She has been critically ill since June 15,
2014. I have had the full responsibility of her care her whole life
but especially these last few months. We are completely tied down and have been
the whole summer. Can I be compensated for the care I give her?”
Our best wishes go
out to anyone in this situation. We know providing lifetime care to a family
member is not only physically and emotionally draining, it takes a financial
toll, too.
Help finding programs and resources
For help finding
financial relief, start by consulting city, county, state and federal agencies
for the disabled. Don’t overlook hospital outreach programs, religious
organizations and support groups for specific disabilities — all of which may be
able to put you in touch with caregiving resources in your community. Also, check with your local
Social Security Administration office on eligibility requirements for public
benefit programs.
Tax breaks for home caregivers
For additional help,
we reached out to CPA Keith Depies of Roberts, Ritschke
& Tyczkowski, Ltd., Neenah, Wis. Here’s what he had to say:
Individuals can be
compensated for providing care to their critically ill family
members. Depending on the requirements of providing care to family
members, the compensation may be taxable to the provider. Previously the
IRS ruled that compensation payments to a related individual would be taxable
income. However, earlier this year the IRS issued Notice 2014-7, which
allows individuals who are compensated for providing care to qualified
individuals to exclude the compensation received from taxable income, whether
or not they are related. There are several requirements
to qualify for the exclusion under Code Section 131 of the Internal Revenue
Code. The first is that the payments are to be received under a state
Medicaid Home and Community-Based Services Waiver (Medicaid waiver) program.
Other important
requirements:
- The difficulty of care payment is required as compensation of the additional care needed because the qualified foster individual has a physical, mental or emotional handicap.
- The care must be provided in the provider’s home.
- The state must determine the need for this compensation.
- The payor must
designate the compensation for this purpose.
A state may obtain a
Medicaid waiver, which would allow the cost of home or community-based services
to individuals who would otherwise require care in a hospital, nursing home or
intermediate care facility. Home services include personal care services
such as eating, bathing, dressing, hygiene, medication management and meal
preparation. Providing these services in your home are generally more cost
effective and are necessary to avoid institutionalization of the patient.
Each states law
determine how their program is going to be administered and whether or not
family members can be compensated for providing home-based care. The
states may also work through an outside agency to certify individuals and
Medicaid providers to provide services to eligible individuals. These care
programs and the providers are then either approved by and monitored by the
state or contracted agency.
The new rulings are
effective for qualified payments received after Jan. 3, 2014, but a taxpayer
may be able to use this guidance for any qualified payments that were received
in previous tax years. Please consult with your tax professional for
guidance related to your personal facts and circumstances. More qualifying
information and definitions can be found here: http://www.irs.gov/pub/irs-drop/n-14-07.pdf.
In accordance with
applicable professional regulations, please understand that, unless expressly
stated otherwise, any written advice contained in, forwarded with, or attached
to this notice is not intended or written by Roberts, Ritschke &
Tyczkowski, Ltd. to be used, and cannot be used, by any person for the purpose
of avoiding any penalties that may be imposed under the Internal Revenue
Code. No one, without our express prior written permission, may use or
refer to any tax advice in this communication in promoting, marketing, or
recommending a partnership or other entity, investment plan or arrangement to
any other party.
Caring for the caregiver
Remember, you must
also care for yourself in order to be an effective caregiver. Consider respite
care to give yourself an occasional break. Respite care can be as informal as
an agreement with other family members or friends, or a formal contract for
services with an agency.
If you haven’t
already, visit our Caregiver Resource
Library
for more than 1,500 links to government organizations, health care services,
financial resources and more. And here are articles that may offer additional
help:
About The
CareGiver Partnership. The CareGiver Partnership helps caregivers and their
loved ones with answers to their caregiving questions, including information
about home health care products and supplies, from our Wisconsin-based team of
Product Specialists who are all current or former caregivers. The company’s Web
site provides the largest online library of resources on subjects most
important to caregivers — from arthritis to assisted living, and Parkinson’s to
prostate cancer — as well as access to more than 3,000 home care products for
incontinence, skin care, mobility, home safety and daily living aids. The
CareGiver Partnership was founded in 2004 by Lynn Wilson of Neenah, Wis. Visit
http://www.caregiverpartnership.com to learn more or call 1-800-985-1353. Help
support this ad-free blog by answering several questions about caregiving here. It will take just two minutes.
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