My 78 year old mother, with Dementia, lives in a Dementia care facility/nursing home that costs about $4900 per month. She is on Medicaid, so the majority of that is paid for by Medicaid and we pay the small difference out of her monthly stipend from Railroad Retirement each month. She does not get SS money, I am told that Railroad Retirement takes the place of SS (you can't get both, you choose the higher of the 2.) So she receives $1576 per month from RR ($18,912/year) - which is NOT taxed. And also receives a small pension from a former employer of $76.50 per month making her total "income" $1652.50 per month. She has zero assets. My question is - do we really have to file taxes for her? Doing so seems absurd as she usually gets a refund. Being on Medicaid, we have to make sure her bank account stays below $2000 per month in order for her to remain qualified, so the last thing we need is more money - of any amount being dumped into her account. Thank you.
Since this is a railroad pension and not SS, this is a question for a good tax CPA. Not a preparer like H&R block. For my Mom who brought in $1700 a month, she did not pay taxes because $1500 of the $1700 was SS. Her small pension, 2400 a year, was under the income limit.
You're very articulate, and I suspect you could work your way through the often complex factors and calculations of preparing returns. But given the Medicaid and RR involvement, it would be good confirmation of whether or not she even needs to file if you have a good, qualified and knowledgeable CPA at least evaluate the situation. I would also concur that this is not an H&R Block project.
I've never been involved with Medicaid so I won't even try to consider how it affects someone's taxable status, which is the bottom line for filing or not.
Retired IRS employee responding here.
Both my MIL and Mom brought in the same amount of money each month 1700. The IRS sent both of them letters saying that they no longer had to pay taxes. My MIL received more pension than Mom but less SS. SS is not taxable income unless you go over the cap set which is 30/35k a year, I think. So with my Mom and MIL they both made 20,400 a year, way under the cap.
You just have to find out if a RR pension is like SS in that its not taxable.