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Help me help my parents!

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  • DrMoneyTails DrMoneyTails 
    Participant
    Status: Resident, Physician
    Posts: 64
    Joined: 10/11/2016

    Cross posting from the bogleheads.. I need some ideas!

    I am a physician and an independent contractor (sole proprietor).
    My father, who lives outside of the USA, recently had a major health problem that is preventing him from working his usual job and I am having to help him financially with about 2 thousand dollars a month.
    Is there any way I can hire him so I can reduce my taxable income? A few ideas that came to my mind: hire him as a virtual personal assistant or a virtual planner, etc. Can I legally do that? What are the proper ways to go about that? Anything I can legally pay for him to do for me from another country?
    Or is that any way I can use this in order to make this more tax efficient? Essentially what I have been doing for the past several months is simply wiring him post-tax money to pay for his medical expenses, etc. I am happy I am in a position to help my father but would also like to make this a little less “financially painful”.
    Any advice would be greatly appreciated.

    Thanks

    #206027 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2621
    Joined: 09/18/2018

    Ordinary and necessary expenses for a business purpose will be deductible.

    Personal assistant or planner doesn’t seem to be headed that way. You are also running into employment tax issues. Sounds like a personal problem to me.

    Your only shot is employing him in the business.
    I don’t see a path to outsourcing that you describe.

    #206036 Reply
    Liked by jfoxcpacfp, Craigy
    Avatar Insurancepro 
    Participant
    Status: Financial Advisor, Insurance Agent
    Posts: 44
    Joined: 03/26/2019

    If he needs $2k net each month it seems that you’re need to pay him more than that to cover his income taxes.

    #206100 Reply
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2503
    Joined: 01/03/2017

    Outside of the US? What country? That’s quite a bit for many countries outside the US.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #206117 Reply
    Liked by Hank, Tim, MPMD
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2281
    Joined: 05/01/2017

    In general I feel like this would fall into the “too good to be true” category and would also be the kind of thing that would be scrutinized by the IRS.

    A general rule of thumb I use for tax issues is that the backdoor Roth is about the only thing that’s too good to be true yet is true.

    But to be fair I’m not an accountant.

    #206173 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7794
    Joined: 01/09/2016

    My reco is to not obsess about the taxes, but your budget. If you can afford the $2k/mo, budget it. Trying to incorporate your ill father into your business, unless he has relevant skills that you would hire someone else to do for that amount, is not tax efficient, it is tax fraud.

    That sounds awful, and I’m not saying that you would commit a fraudulent act, because I realize you’re just looking for help. But that is the description that the IRS would employ.

    My hubs’s surgeon said recently that nothing brings on your actual numerical age like recovering from surgery or major illness. So true. I hope your father is better soon and back to his old self. I admire you for stepping in and helping him out.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #206181 Reply
    Liked by MaxPower, MPMD, Tim
    DrMoneyTails DrMoneyTails 
    Participant
    Status: Resident, Physician
    Posts: 64
    Joined: 10/11/2016

    My reco is to not obsess about the taxes, but your budget. If you can afford the $2k/mo, budget it. Trying to incorporate your ill father into your business, unless he has relevant skills that you would hire someone else to do for that amount, is not tax efficient, it is tax fraud.

    That sounds awful, and I’m not saying that you would commit a fraudulent act, because I realize you’re just looking for help. But that is the description that the IRS would employ.

    My hubs’s surgeon said recently that nothing brings on your actual numerical age like recovering from surgery or major illness. So true. I hope your father is better soon and back to his old self. I admire you for stepping in and helping him out.

    Click to expand…

    thank you for the advice. much appreciated

    #206199 Reply
    Liked by jfoxcpacfp

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