Working Caregiver- Family Tax Concerns

 If I care for my grandmother and she agrees to pay $3000.00 a month do we have to claim this money on our taxes as income?

Answer, in general, is yes. Also, grandmother doesn't get any deduction for medical or nursing expenses since this is just family assistance.

Could give it as a gift. The 2006 gift limit was $12,000. Any excess is taxable but there is a Unified Gift Tax Credit that can apply to the tax on the excess. The Unified Gift Tax Credit is a lifetime credit of $345,800 in 2006. As the credit is used each year, it reduces the total credit available for future years.  

Please check with the IRS on 2007 or preceding year's limits.

** We highly recommend discussing this with your tax preparer to see how it specifically affects your personal return situation. Please do appropriate due dilligence. We are not considered a Tax Certified Consultant and cannot be held responsible for your IRS tax situation.