Posted by Carmen Garcia

Deducting Medical Expenses of Others

Deducting Medical Expenses of Others

There is a way you can deduct the medical expenses of another person, even if the person is not under the same roof as you. This is a tax break that many do not utilize, especially people that care for an aged parent or other relatives.  

There is a provision to deduct the medical expenses you paid for your spouse, someone who you were responsible for, or your kids or parents. While there is no more provision to take dependent exemptions on the tax return, we still use the definition of dependent in this circumstance.

We classify dependents as a child or any qualifying relative. 

A qualifying relative can include your siblings, half-siblings, and any of their children, parents, and other relatives. It also includes in-laws and step-relatives. A relative doesn't need to live with you in the year to fit as a dependent.

Someone who is not a relative also qualifies as a dependent if they have stayed with you for a year, and you lived together without any issue.

Someone who is your dependent cannot file a joint return with an outsider. They can only claim a refund. 

Also, whether the person is a relative or not, they qualify as a dependent if you have provided 50% of their support in a year. We classify support as housing, education, clothing, medical expenses, transportation, and recreation. With this, you could deduct the expenses of your child, parent, or siblings if you are helping with their medical expenses. This also includes in-laws and relatives.

Many times, when someone has to foot the medical bill of a relative, usually a parent in the long term, this rule takes effect. As a result, there is permission to deduct the cost of assisted living or a nursing home for your parents. This, however, depends on why the person is receiving such care. If you provide care for the person in your house, you might be able to deduct the expenses as well.

If the primary reason for living in a nursing home is to get medical attention, you can deduct the entire cost of the nursing home. If, however, the person has to stay in the nursing home for other reasons like custodial care, only the expenses that have to do with medical care can be deducted. With this, payments for food, housing, entertainment, etc., cannot be deducted.

It is even a little complicated to deduct the cost of home care or assisted living. This is because an assisted living facility is not classified as a medical facility but a place of abode. Deductions only apply to the residence that can perform at least five of six basic activities of daily living (bathing, eating, dressing, continence, transferring, and toileting). What these people will deduct are costs relating to medical care only. 

If, however, the assisted living person cannot do two or more of the activities listed above, the care plan in place allows for the deduction of the entire facility cost. A nurse or physician usually draws this care of plan.

If in an assisted living facility, a patient was mentally ill due to dementia, for instance, according to the doctors, caregivers were necessary for her safety and medical reasons. Since there was a plan of care in the case for the patient, the physicians believed she needed caregivers. With long term care providers, there will be a list of bills that reveals the items that relate to medical expenses and personal care.

You can deduct the care cost provided at the patient’s home, including care from relatives and  the care must be necessitated due to health issues. In a case where the care is from a relative, a written agreement is usually necessary as this agreement provides, not only the care, but is relevant to associated compensation and is required by the IRS as they might also assume that if a relative is providing the care, it might be without the expectation of compensation.

As specific medical attention & care is usually expensive, the responsibility of substantial medical bills for the patients needs of long term care,  could translate to a large amount of money and reviewing the rules of expenses with a tax advisor, will be more than helpful.


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Carmen Garcia
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