Do I have to fill out tax forms for my mom who’s in a nursing home since I cashed in her annuity to help her qualify for Medicaid?

by Elizabeth W. Kidd, CPA | Feb 22, 2019

My mom is in a nursing home. I had to cash in her annuity and spend it down so she could qualify for Medicaid. Do I have to fill out tax forms for her? She hasn't claimed taxes for 20 years now.

There are various types of annuities. If the distributions from her annuity are taxable, you should receive a 1099 from the company. Distributions from a taxable annuity will require the filing of a tax return for the annuitant.
The distribution may raise her income sufficiently to result in the taxability of some of the Social Security benefits she received.

Consider as well that federal income taxes may have been withheld at the time of the distribution. It could be that filing a return would result in a refund.

You should consult with a tax professional on such complex matters.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Elizabeth W. Kidd, CPA, is a retired accounting instructor in Erie, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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