My mother went into a nursing home, sold her home per the request of Medicaid. Her attorney gifted the profits to me for her care after the sell.
It was a large profit.
Can Medicaid come after me and how will this affect me at tax time. I'm married and on disability. I will be filing for divorce this month. Should I file married and separately?
I'm lost and scared.
To me this says that the attorney did not actually gift you anything to be used for your purposes. It says that the attorney entrusted you to care for mom's money to take care of her needs. Is that correct?
What a tangle web we weave...
This money should never have been gifted, that can't even happen in the 5 yr look back. It will cause penalties. The reason Medicaid wanted it sold was so the proceeds would go towards Moms care. I would say at time of recovery, they will want to place a lien on the house and there is no house. So they will question where the proceeds went and may ask for you to pay them back.
You need an elder lawyer at this point well versed in Medicaid. I have no idea why a lawyer felt Moms money was a gift to you unless she had passed. If she had passed when the house was sold, thats a whole other thing that I won't get into now. But if she was living, that money was hers to use for her care.
You cannot file separately unless you file exactly the same way is my understanding. In other words, if you file straight no deductions, he has to file straight no deductions. If u file with deductions he has to too. But this and whether u pay taxes on the gift is for a CPA tax preparer. When I divorced, the last year we were married legally, I am sure we filed as married.
Did you live with and care for mom? Your disability is likely to have an impact on Medicaid laws. There are specific exemptions that apply to disabled children of the elderly who need facility care.
Please explain "gifted per her attorney". We're the proceeds deposited to some sort of trust that you didn't know about?
The funds in any case must be in her name and used ONLY for her care, not to pay your bills.
Since you mention Medicaid, it sounds like she is already on Medicaid, if so, you need to get this straightened out now as she should be self pay due to selling her home and have adequate funds to do so.
Medicaid and the government are not easy on people who try and beat the system.
Time to be proactive and seek professional help. Good Luck!
Gifts are not taxable to the recipient; however, if you are being compensated for care, that would be taxable income (but fine with Medicaid with appropriate documentation, just not as a lump sum).
Please tell us that you put this money in an account in only your name rather than a joint account. Your divorce lawyer will discuss the ramifications with you if you shared the money with your soon to be ex-spouse.
Consult an elder law, Medicaid lawyer on the gifting vs payment problem.
Edited to add;
She will need to file a gift tax return, but almost certainly owe no tax, for the year of the gift.
Wishing you all the best.