Unraveling Taxes, Reimbursement & Fiduciary

Discussion in 'Fiduciary questions' started by k2, May 10, 2015.

  1. k2

    k2 Newbie

    I am struggling with how to deal with a few issues that came up during my forensic accounting and would be grateful for your advice as I prepare additional information for the VA.

    My 91 year old Dad began receiving A&A benefits 3 years ago. Now that my Mom has become legally blind, they are finally willing to accept my help.

    It appears that he has only been receiving about 25% of the benefits for which he was eligible because he hasn't submitted documentation for home care expenses and other recurring reimbursable medical expenses. The V.A. recently asked for this documentation and I am racing to get it in and get them some badly needed relief.

    Here are the top 3 issues.

    1. An LPN with an unhealthy self interest told them that she was an independent contractor and they paid her, and the employees she hired and fired, with that understanding. The LPN (who has no assets) has wisely "chosen" another career, but left them in arrears on taxes. We're working as quickly as we can to pay state taxes, but cannot pay federal without their VA benefit. How do I address this inconsistency when the VA checks with the IRS? It seems that I have no choice but to explain it in a cover letter.

    2. I also discovered that their pharmacy over billed them for 2 1/2 years. It was a significant, but unintentional, error so we settled for the full difference plus 7%, which will, of course, be reported as income for the current year. But how do we deal with the EVRs used to submit additional data for prior years? Include a note in the cover letter and add a notation to the verification at the end that they didn't received reimbursable funds that specific year?

    3. I'm guessing these issues may prompt the VA to require a fiduciary. Is it best to wait and see or deal with it pre-emptively? My parents are very keen to have me serve in this capacity, as am I. Where can I find the VA's eligibility requirements/qualifications for this role? (For example, are there problems with a fiduciary handling things via long distance?)
  2. vetadmin

    vetadmin Administrator Staff Member

    You may be complicating this more than necessary.

    Use VA form 21-4138 Statement in Support of Claim to update current care expenses and adding your Mom so that he is awarded as Veteran with spouse. You will also needed a VA 21-2680 Physician's Evaluation on your Mom.

    The VA no longer requires the EVR annual report.

    Taxes would not be an allowable medical deduction, so do not mention that issue as it will only muddy the waters, and you want to keep this clean and on point.

    You do not request Fiduciary unless the VA finds your Dad "mentally incompetent". If they did not do so on his original application, then this is a door you want to keep shut, and not deal with unless necessary. If you are handling their financial affairs currently, you should just continue what you are doing. Again, keeping things as straight forward as possible is always the best route to go.
  3. k2

    k2 Newbie

    Thanks for your prompt reply!

    I especially appreciate your advice re the fiduciary process. These errors could have happened to anyone. Hopefully, the fact that they were discovered and are being handled will be sufficient.

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