What is this? Is it legal?

[Possi]

OMG. Client sends a note saying that the elder care lawyer told them they had to"'reduce the amount of money in Granny's account. So we had to pay hubby (my client's husband, Granny's grandson) 'WAGES' for 2015 from her account since he was no longer working and not earning a paycheck."

THEN she says "His 'earned wages' from granny were $38,321.76" ISTG it's true down to the penny.

I think they expect me to launder money except that they aren't smart enough to even know what they are asking.

I'm going to put it on a Sch C to cover my @$$. What would the occupation be? Let's see, is there a business code for "thief?"

They also started a lawn business last year. I don't have any info for that yet because they think it is a separate tax return all together. See? Not so smart. (Not INC or Partnership, but sole prop)

So, while I wait for the lawn business income, let me ask... I should do 2 Sch C's, shouldn't I? I shouldn't slam Granny's income on the lawn business. I'm looking forward to this AUDIT, and I need to be correct in every angle.

I don't understand why the lawyer didn't have Granny "gift" the max to each of them. That would have taken care of a lot of it. If there are more grandchildren, she could have shared the wealth.

So, what say you?

I really thought I was done with strange clients. I might have to fire these, but I do her parents and her brother's returns and I don't want to offend THEM.

[BHoffman]

I think I would be wanting a letter of explanation from the lawyer.

[jasdlm]

Sounds like they are trying to qualify Granny for Medicaid.  She can't gift because that would be a fraudulent transaction subject to the 5 year (depending on the State you're in) look-back rule.  Does grandson work for Granny?  Are they asking you to prepare a W2?  Sounds like you need quite a bit more information.

[Terry D EA]

6 hours ago, jasdlm said:

Sounds like they are trying to qualify Granny for Medicaid.  She can't gift because that would be a fraudulent transaction subject to the 5 year (depending on the State you're in) look-back rule.  Does grandson work for Granny?  Are they asking you to prepare a W2?  Sounds like you need quite a bit more information.

I agree and as I read your original post my mind was leaning toward trying to qualify Granny for Medicaid. I think I would need an explanation from the lawyer as well. This could turn into a mess. If they are asking to create a W-2, is the grandson a household employee? Certainly seems like a lot of unanswered questions here.

[Pacun]

Why don't you just refuse the customer and forget the conversation with the lawyer?  Do you really have time for that client when you only have 9 days left?

[GraceNY]

I agree with others.  Sounds like Medicaid planning.

Thread cautiously.  You certainly don't want to be inadvertently aiding and abetting in anything that could be construed as Medicaid fraud.

[mrichman333]

10 hours ago, Pacun said:

Why don't you just refuse the customer and forget the conversation with the lawyer?  Do you really have time for that client when you only have 9 days left?

AGREE, defrauding Medicaid is serious.