My Dad has been irresponsible his entire life. Also he has been very secretive and would not allow anyone to know about his finances. He recently was determined to not have the capacity to manage his person or his finances.
My brother took on Dad’s guardianship of person. Elder care lawyer said since there was no money, not to get guardianship of finances.
Dad has been in a nursing home for three months, and Medicaid has been approved.
Now the bill collectors are on the hunt. He owes for payday loans, medical copays, ambulance rides, Publisher’s Clearing house.
His SSecurity check is going to the nursing home and Medicaid is paying the rest of his bill. My brother is getting Dad’s mail. Dad did not file with the IRS last year and they are sending notices. He only gets Social Security, but you still have to File.
I was his POA until my brother volunteered to get guardianship.
I am getting phone calls from people that want their money. My brother is getting calls from people that want paid.
Anyone else having this problem?
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To the creditors who call, you can ask for their address to send a letter detailing that you are not to be contacted again, that he cannot pay, that he lives in a medicaid funded nursing home which takes 100% of his check. You can listen to DaveRamsey on the radio or online who gives this advice when asked. It's not your debt, don't pay it!
IRS as a super creditor can attach his SS or other retirement income. That he’s elderly and in a facility on Medicaid doesn’t matter.
For those on LTC Medicaid, this poses a problem as they are required to do a copay of their SS & any other monthly income to the facility. If IRS attaches say 1/3 of his SS, then he is in default of medicaid and facility has to notify Medicaid & facility can do a 3O Day Notice to move out. To keep him there it goes onto you to do a Private pay contract or you move him into your home. He’s toast on another facility as it’s in his Medicaid file. This is serious stuff, you don’t want to go there....
State can do do the same to any state paid retirement or can hold any tax refunds or rebates.
Regarding the other debts, unless you pay these, he will default and the creditors will write it off. Although that sounds terrific it will pose a problem later on. Any creditor owed over $600 who is not paid can file a 1099-C Cancellation of Debt for the amount in the tax year written off. Bigger creditors like CC, phone, utilities co, do these automaticcally. They can’t be avoided. IRS gets the 1099-C and dad gets a copy of it. The figure on the 1099-C can be the debt owed plus interest and fees. A 10k debt can morph to 16k.
1099-C is taxable income.
Yes, fully taxable income & reported to the IRS to the penny.
Dad needs to file taxes to possibly get beyond this. It is not imho a DIY Quickbook or TurboTax project. He needs a CPA or tax pro who understand doing IRS 1040 & 982 forms. I’d bet dad gets 1099-c for 2018 & 2019 tax filings as we’re already past mid year 2018. Your brother as he’s guardian has to take care of doing this. If bro has been legally appointed guardian, that guardianship is a court oversight process with regular filings. The judge is gonna be super SUPER peeved if Bro as guardian did not deal with this. If he’s guardian then legally none of this is your responsibility. You can share your thoughts & concerns but no es su problema.
A cpa can do and file the taxes and possibly negotiate reducing the penalty (not the interest, ouch) if anything is owed.
Also, depending on the letter sent, it could be the first step to an audit. So you definitely don't want to ignore letters from the IRS, for too long.
Sparkles