Due to poor health and advanced age, my wife's 92 and 94 year old parents have moved into our family home. They require daily assistance for care needs. They preferred the safety of staying with loving relatives over the option of hiring in-home care providers or moving into an assisted-living facility. My wife left her full-time employment in order to care for them. We are blessed to be able to assist. My in-laws desire to pay rent, cover their food costs, and compensate my wife. They are not wealthy but have some savings. They receive no government aid beyond social security. This will be private pay.
What is the tax treatment for this form of compensation? Regarding income? Regarding rent? Regarding food?
This is family. (and a blessed one at that) Therefore I really see nothing to report here. However, there is one thing I do question.
What is the intent of the in-laws that are willing to pay rent, food, and compensate your wife? Are they looking to qualify for claiming your wife's parent's as dependents or something? I'm also confused by the references to "my in-laws" and "my wife's parents". Aren't your wife's parents your in-laws? Are you saying your wife's parent's are looking to pay their way as well as compensate their daughter? Or are you referring to other relatives on your wife's side of the family?
I need help with this as well. I am single no children and June 2019 added 700 sq ft to my home and relocated by 68 yr father and 67 yr old mother into my home. I pay all household costs including cell phones. My father has a a small retirement and social security, my mother only social security. I do not want to impact them filing their own taxes..they have a house they rent as a rent to own which helps covers their medical...my mother is a heart patient with MS. Is there there anything I can do?
It depends. Taxpayers are able to claim parents as a dependent if certain conditions apply. The parents do not need to live in the taxpayer's home. However:
- The parents must have gross income of less than $4,200
- You must provide more than half of their total support
You will sum the amounts of annual rent, medical, utilities, meals, etc. and determine if you contribution exceeds half of the total cost. If these conditions apply, you could be entitled to the Credit for Other Dependents, which would reduce your tax liability by $500 per dependent.
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