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Sorry, I should have been more clear. VA is not involved in my case. I was just interested in the tax aspect. I am being paid privately from my mom.
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It doesn't matter where you are employed but the conditions under which you are employed. For instance nannies are employed in the homes where they work but they are still domestic employees. I cannot stress enough the fact that if your mother is receiving the aid and attendance benefit and you are not being paid and cannot show proof of payment from the date when the benefit payments started, VA could demand all of the money back that has been paid to this point. You must have evidence of being paid based on what was submitted with the original application. Do not put that money into her checking account but put it into a separate account in your name. The VA aid and attendance benefit is not an entitlement it is a gift. VA can demand its money back. Don't mess around with them they can be nasty. I am concerned that you seem reluctant to accept the necessity of creating a paper trail in case you are audited by VA. In addition, in January of every year the EVR must be filled out and it must be certified that you were paid the amount that you said you would be paid. Most people don't understand that the original application has really nothing to do with the benefit that is paid. The annual EVR is the actual verification that VA uses to determine if the benefit was paid properly or not and whether future benefits will be paid.

I help people with this benefit daily and talk to hundreds of people every month. I recently talked to one poor lady who didn't understand the necessity of keeping proper records and of answering the questions on the EVR and not ignoring it. She had to repay VA $45,000 that her husband had received, probably because she ignored the EVR and thought that the benefit was an entitlement which it is not. It was an extreme hardship for her. Without records she could not prove her case but it appears from what she told me that she did not have to pay that money back.
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My mom lives in my home. She requires 24/7 care, documented by her docs. She has recently drawn up a caregiver contract and intends to pay me, significantly less than a nursing home. Am I still considered a domestic employee in my own home? Thanks,
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Under IRS rules you are a domestic employee. The so-called nanny tax applies. Go online to Google and type in "nanny tax" and find out the responsibilities. There are services online that will do the tax withholding for the Social Security, Medicare tax and unemployment tax and issue you the W-2 at the end of the year. As a general rule, federal and state taxes do not have to be withheld and deposited quarterly but they must be paid.

Make sure you keep adequate records and have a care contract between you and your parents. Most advisers also require that you keep a daily care log of the services you provide . There must be a medical component to your services such as medication reminders , helping with activities of daily living or providing a secure environment in the event of dementia or Alzheimer's . Without the medical component, your services are not deductible from the parents income and VA could disallow the benefit from day one . Even providing just a few minutes of the medical services a week will make all of your nonmedical services deductible.

Having a tax service also helps create a paper trail. When he or she fills out the EVR for VA in January of each year, the veteran beneficiary or the fiduciary if you are such have to certify in writing the exact medical costs that were incurred the previous year as well as your parents have to report their income and assets for the previous year. Any deviation from the estimates that were made when you submitted the initial application could result in an adjustment of the benefit or worse case scenario VA could come back and demand its money back. You need to be extremely careful about documenting the flow of money. Do not put money back in their checking account but keep the money they pay you in a separate account of your own. VA does random audits on EVR's and you must have verification for medical expenses paid to you by your parents or VA will disallow the benefit from day one, demand all of its money back and send a collection agency and impose penalties and even execute court judgments . VA has also been known to garner pension checks and Social Security to get its money back . Be aware of the consequences of not keeping a paper trail . Also medical expenses must exceed or equal your parents combined income in order to receive the maximum benefit. Make sure they pay you every month or there could be dire consequences.
Tom
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