Woulld it be better to include my mom's contribution to the household as rent or income?

My disabled adult son lives at home. Our account advised us to no longer claim him as a dependent and to call his contribution to household expenses "shared expenses" rather than "rent" so we wouldn't have to consider it income. That said, we do not have to worry about Medicaid look-backs etc. You should definitely get advice from an accountant and perhaps even Medicaid to avoid any violations that may effect your mothers eligibility. I think Pamstegmas advice regarding a written contract is an excellent starting point. When considering the dollar amount our son would pay we had to get final approval from a judge. This involved a complete break down as to how we came up with the dollar amount charged - house payment, insurance, food budget, cable bill, phone bill etc and what portion of each of these costs and why. For instance my son is non-verbal and doesn't use the phone but I conduct a small amount of business regarding my son and his care by phone - resulting in only a minor fraction of the phone bill being a part of my sons "shared expense". I always follow the adage "better safe than sorry" so if I were you, Id definately cover all my bases by starting out with professional advice on how best to proceed with this.

You need a written contract and detailed records with receipts. Medicaid has often insisted cost-sharing was a gift because there was no contract. Avoid claiming her as a dependent; especially if she is cost-sharing.

Well, if the funds are for more than rent and include caregiving, it seems to me that claiming it's all rent would be highly inappropriate.

I do agree that this is an issue for a CPA.