There may be a valuable tax deduction that could help with tax burdens.
Q. My stepmother is in a nursing home. She qualified for Medicaid through a sell-down of all her assets. She receives a government pension as well as income from my late father’s pension. This money is put into a qualified income trust and 100% is provided to the nursing home. I was told by the Medicaid office that she should have no withholding for taxes. The problem is at the end of the year when filing her taxes, she owes money to the IRS.
She has no money in her bank account to pay an accountant or to pay these taxes. Should she have to pay taxes when 100% of her income goes to the nursing home under a Medicaid plan?that could make all the difference.therefore, it’s unusual that taxes would be owed,” said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park. “There also may be additional deductions and credits that seniors can take.