Re: Homeless Sister

From: Avrum Lapin <avrum113@earthlink.net>
Subject: Re: Homeless Sister
Date: Wed, 9 Dec 1998 06:12:55 -0800

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At 12:57 PM -0700 12/8/98, persfin-digest wrote:
>Date: Sun, 06 Dec 1998 12:58:37 GMT
>From: jmetz@slonet.org (JMetz)
>Subject: Homeless Sister Deductions?
>
>I allow my homeless sister to live on my property in a trailer. Since
>I contribute more than half of her living expenses I claim her as an
>exemption on my income taxes. She also helps me in my home-based
>business for which she receives no monetary compensation. Since I can
>recieve up to $10K deduction for gifts to relatives, would the IRS
>allow that in lieu of my actually paying her for her help in my
>business? What I'm really trying to get is the exemption and deduction
>together.  Is that possible? Thanks.
>
$10K deduction for gifts to relatives. I think not.  What you can do is
give up to $10K to each of a number of individuals per annum without
triggering the need to file for gift tax (and thus reduce the $625,000
estate tax exemption)

Works without pay?  You are open to a law suit for back wages should she
ever get PO'ed at you (or falls under the influence of of someone who sees
you as a target).   To do this properly she should be paid wages, have FICA
etc taken out and submitted and then you can charge her rent for the
trailer.  Not sure where she gets her food money but if it is welfare or
SSI disability she had better declare her assitance from you or she could
be prosecuted.

Since you provide over half her support, she is your dependent. You can
also claim medical expenses.  If not married you can file as head of
household (if you can make the trailer part of your house).  If your income
is low enough and the sister meets the definition of disabled you might be
able to claim EIC.

If you make a loan to her (set it up properly) and she defaults you might
be able to deduct the bad loan if you go through an appropriate collection
process. (but be prepared for an audit).

In my opinion she is not homeless - she has a roof over her head. I am not
sure if she has a real mental problem or she is what I describe as a
professional victim.

Avrum Lapin
Upland., CA

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