Please Help Me Calculate My Dad's Estimated W/H for 2015

[Bonny]

Hi All,

This is a follow up to a situation I first wrote about back in July.

My dad found out that he was eligible for a tiny pension ($100/mth) earlier this year. He was eligible starting when he was 65 almost 14 years ago. Because he qualifies for the poverty level Medicaid program we've had to do a lot of research to figure out how to handle both the monthly amount as well as the approximately $16,800 back lump sum payment.

I've received legal advice and now I need help with his estimated taxes. Starting in 2015 he will be receiving $1209/mth in SS payments in addition to the $100/mth and the approximately $16,800 lump sum payment. There is no other income. He will be 79 in February and hasn't needed to file an income tax return in years.

Unfortunately the lump sum is NOT eligible for an IRA rollover. He's going to need to count all the above income. I'm filling out his forms for the pension and need to choose how much to withhold. The options are a %, a lump sum or no withholding.

I think the easiest option is probably to do $ 0 W/H from the pension and do a quarterly payment on April 15, 2015.

What says the wise tax board?

FWIW (other than a personal exemption) he would have no deductions. He's renting a room and Medicaid picks up nearly all his health costs. He will be buying a supplemental dental insurance in the amount of $85/mth but I don't think that will help.

Many thanks for your help! 

[mwcpa]

based on the above his federal income tax will be under 1,000 (based on the 2015 tax law known today, Congress has a habit of changing things late in the year), therefore no estimates are required and any actual tax due will not be due until April 2016.

[Bonny]

Jan 2, 2015 5:50:45 GMT -5 mwcpa said:

based on the above his federal income tax will be under 1,000 (based on the 2015 tax law known today, Congress has a habit of changing things late in the year), therefore no estimates are required and any actual tax due will not be due until April 2016.

Sweet! I just have to make sure we hold back the $1000 plus another $500 for CA. I'll have a professional prepare the final return but I really appreciate your help mwcpa so I could fill out his pension paperwork.

Thanks and Happy New Year!

[TheOtherMe]

Bonny, does he get to stay on Medicaid?

[Bonny]

Jan 2, 2015 20:24:44 GMT -5 TheOtherMe said:

Bonny, does he get to stay on Medicaid?

Yes, it appears so.

We have to handle the two pieces in different ways. The monthly $100 has to be mostly off-set by purchasing supplemental premiums (in his case dental) to keep his income within the Medicaid limits. It's one of the few expenses that are allowed to off-set income.

The lump sum needs to be disposed of within the month it's received. He can't keep assets of more than $2,000. He will gift it to me in two installments in order minimize a possible (but unlikely) delay for entry into an assisted living facility. He's doing fine but God knows anything could happen tomorrow like a car accident or stroke.

ETA: I will be giving him the money back. He needs A LOT of dental work. If it were one single bill he could be back in compliance but the dental treatment he needs will take months. Oddly enough spending money on health bills other than premiums and co-pays is not available to off-set his income. Go figure?

While this sounds a little fishy I had the legal staff supply me with a the CA's director's letter. Some wise person realized that a one-time lump sum payment which could kick someone off Medicaid for a fiscal year could actually cost the government more money due to delayed treatment et cetera.

If you want more info that might help your dad PM me. I'm busy tonight but can give you some phone numbers some time tomorrow. Just let me know what county your dad is in.

[TheOtherMe]

I'm not in California and my dad is not on Medicaid.  I was just concerned about your dad.

I do volunteer work as a rep payee so I'm very aware of the $2,000 limitation.  It's the nursing home my client is in who doesn't cash the checks timely and it makes it look like she has too much money.  Once they cash it, she's fine.  Of course, the month the state wanted the bank statement, the nursing home hadn't cashed the check.  I got a phone call and lecture about the $2,000.  I told her case worker that I can't make the nursing home cash the check, but I do send it the day I receive the bill.

[Bonny]

Jan 3, 2015 18:58:00 GMT -5 TheOtherMe said:

I'm not in California and my dad is not on Medicaid.  I was just concerned about your dad.

I do volunteer work as a rep payee so I'm very aware of the $2,000 limitation.  It's the nursing home my client is in who doesn't cash the checks timely and it makes it look like she has too much money.  Once they cash it, she's fine.  Of course, the month the state wanted the bank statement, the nursing home hadn't cashed the check.  I got a phone call and lecture about the $2,000.  I told her case worker that I can't make the nursing home cash the check, but I do send it the day I receive the bill.

TheOtherMe,

In reading the Medicaid regulations for "protected" assets and income for CA, payment obligations for things like nursing home care are exempted.

It may be different in the state in which you work but it seems to me the case worker was a little over the top. Sorry you had to go through that.

[TheOtherMe]

I've had lots of problems with the case workers in this state.  The turnaround time is 10 days.  By the time the volunteer agency receives the mail and sends it to me, the 10 days are over.  They used to give extensions.  This time, I was told they no longer give extensions.

I had one client where I submitted pages and pages of stuff 4 or 5 times.  It got denied the first time because I didn't send proof of the money in the nursing home trust fund account.  It was less than $100 and she had been on Medicaid for over 30 years.  Did they really think somehow she had acquired assets when she was blind and bedridden?  At least her sister had POA.  She got a volunteer agency involved because she had been diagnosed with Ahlzheimer's and knew the day was coming when she could no longer handle it.  I ran all over getting the documentation DHS wanted because of the denial.  I was shocked that her burial fund was almost $30K and the family spent most of it.

I did have a high school classmate who had worked for DHS.  With the family's permission, I talked to her in detail about the situation.  If I received another denial, she was going to do a conference call with me to DHS to see exactly what they wanted for this poor woman.