Q. Thank you again for working with our family last year to protect our parents' assets, get our father approved for nursing home Medicaid, and set up the irrevocable Living Trust Plus for our mother. Now that it's tax time, we have numerous questions. I'm
helping my mother this year for the first time given all the changes that have occurred and given that my father used to assist with tax filing, and I'm not sure if this is something we can do on our own or whether we need a CPA.
Q1. In the past, our parents have always filed as "married filing jointly." This year, given that our father
is on Medicaid, we aren't sure. How should a married couple file taxes after one spouse is on Medicaid? My mother is under the assumption that they would still file as married filing jointly. Is this accurate, or do we need a CPA to answer this question? Can you shed any light on how best to proceed when it comes to filing taxes now that one spouse is receiving Medicaid?
Q2. Are the Medicaid benefits themselves subject to income tax? With our father's income being so low, Medicaid is paying over $100,000 per year to the nursing home on his behalf. Is any of this taxable to him or to our mother?
Q3. How do taxes work on the assets that were transferred to my mother's
irrevocable Living Trust Plus?
Q4. Another big change in their situation is that my mother decided to take Social Security this past year at age 70. She did this after you got our father on Medicaid -- does this in any way affect our father's Medicaid coverage? Will our mother have to pay any of her Social Security to our father's
nursing home? Are my mother's Social Security benefits taxable?
Sorry for so many questions, but as always we greatly appreciate your help!
