My family is blessed with our first baby and we are lucky enough that my parents were willing to move from Europe to come and live with us to take care of the baby. That is sort of a custom, a common thing where I came from.
I offered to pay my parents for doing so but the idea is offensive/repulsive to them.
The last few years they were earning income by renting a house in the Mediterranean. They sold the house for $500k, transferred the money to the USA and invested it all mostly in individual long term treasuries which pay around 5% (they aren't interested in the stock market and have zero appetite for risk and they ignore interest rate risk). This brings them around $25.000 per year in interest income and they still aren't getting any pension in Europe. They think that this is enough since they live in our house (we separated a "unit" for them), drive our car and basically just have expenses for flights to Europe, groceries and a few generic meds.
They are however getting older and need to see doctors fairly regularly and we know how expensive that can be if one doesn't have insurance.
Unfortunately they do not have work experience in the USA, so do not qualify for Medicare.
They need something close to $28.000 in income to qualify for Obamacare (around $3000 more than their income).
Which leaves them with MedicAid, but we cannot find doctors that take MedicAid and are open for new patients in our area.
I am wondering if I am allowed to pay them $3.000 income for taking care of my newborn?
However, I would like to do it in an absolutely legal way and I am terrified of breaking any laws.
The thing that makes me wonder if I'd be breaking laws is the fact that one can engineer a salary for parents in such a way to maximize the subsidies one gets from the government for the marketplace insurance. Basically, you get the most subsidies if you make 1$ above the $28.000 threshold - in that case the government pays entirely for your private insurance (silver plan). So if we decide to pay them $3000, they'd get maximum subsidies and if we decide to pay them $20.000 they'd get a much smaller amount from the government and would need to add a lot of money from their own pockets for the insurance (naturally).
So the question is, how do we decide what is the fair value that I should pay them? I talked with the CPA about this and he said that I do not have to pay them anything, that millions of people in the USA do not pay for grandparents to take care of the grandchildren. I asked him about the medical insurance implications and everything that I'm asking about here and he said that he's not an expert on that topic and that I may need to find someone else for those kinds of questions.
But if we decided to be market driven and see that the cost of daycare would be around $20.000, then we could also take into account that my parents are living in our house for free, which also has some value and which would lower that $20.000.
Do you have any advice for me? What would you do in my situation?
I offered to pay my parents for doing so but the idea is offensive/repulsive to them.
The last few years they were earning income by renting a house in the Mediterranean. They sold the house for $500k, transferred the money to the USA and invested it all mostly in individual long term treasuries which pay around 5% (they aren't interested in the stock market and have zero appetite for risk and they ignore interest rate risk). This brings them around $25.000 per year in interest income and they still aren't getting any pension in Europe. They think that this is enough since they live in our house (we separated a "unit" for them), drive our car and basically just have expenses for flights to Europe, groceries and a few generic meds.
They are however getting older and need to see doctors fairly regularly and we know how expensive that can be if one doesn't have insurance.
Unfortunately they do not have work experience in the USA, so do not qualify for Medicare.
They need something close to $28.000 in income to qualify for Obamacare (around $3000 more than their income).
Which leaves them with MedicAid, but we cannot find doctors that take MedicAid and are open for new patients in our area.
I am wondering if I am allowed to pay them $3.000 income for taking care of my newborn?
However, I would like to do it in an absolutely legal way and I am terrified of breaking any laws.
The thing that makes me wonder if I'd be breaking laws is the fact that one can engineer a salary for parents in such a way to maximize the subsidies one gets from the government for the marketplace insurance. Basically, you get the most subsidies if you make 1$ above the $28.000 threshold - in that case the government pays entirely for your private insurance (silver plan). So if we decide to pay them $3000, they'd get maximum subsidies and if we decide to pay them $20.000 they'd get a much smaller amount from the government and would need to add a lot of money from their own pockets for the insurance (naturally).
So the question is, how do we decide what is the fair value that I should pay them? I talked with the CPA about this and he said that I do not have to pay them anything, that millions of people in the USA do not pay for grandparents to take care of the grandchildren. I asked him about the medical insurance implications and everything that I'm asking about here and he said that he's not an expert on that topic and that I may need to find someone else for those kinds of questions.
But if we decided to be market driven and see that the cost of daycare would be around $20.000, then we could also take into account that my parents are living in our house for free, which also has some value and which would lower that $20.000.
Do you have any advice for me? What would you do in my situation?
Statistics: Posted by Regressor — Sat Mar 16, 2024 1:31 am — Replies 1 — Views 397
