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Deducting Medical Expenses of Others

Deducting Medical Expenses of Others

The IRS allows taxpayers to deduct medical expenses used by themselves, their spouses, or someone claiming them as a dependent. Although tax returns do not accept medical deductions for dependents, the law still has dependents in other circumstances. 

Medical deduction falls under Section 213, stating that taxpayers can deduct expenses incurred on health care of the taxpayer, individual spouse, qualified child of the household, or qualified relative as stated in Section 152. 

Who Qualifies?

A qualified dependent, child, or other relatives. However, qualified relatives are a broad aspect that includes siblings, half-siblings, and their children. In addition, the law allows parents and their ancestors, step relatives, and in-laws. 

A relative must not live with you for half the year to qualify as a dependent.

Conversely, a person that is not a relative that has lived with you for the tax year as a household member without violating local law is qualified.

However, a dependent person cannot file joint tax returns with another person except for a refund. Furthermore, you can only claim a dependent if you provide half the support, such as clothing, housing, medical cost, recreation, education, and transportation during the tax year. However, you can include house rentals on the returns as a support amount if the person lives in your house. So, you can claim medical deductions of a parent, sibling, or child. 

The rules are tangible if you're helping with the medical care or long-term care of a relative, especially a parent. In addition, you can deduct the nursing home cost or assisted living residence but are limited to reasons for the person living in your residence and the type of care received. For example, the reasons may include one's physical condition and the need for medical attention. 

However, suppose the case is not the primary reason for the expenses in the nursing home, especially in the case of primary custodial care. In that case, only the expenses used for medical and nursing care are deductible. You cannot deduct payment for food, lodging, and other personal expenses. You can also deduct the expenses if the care is provided in your or your dependent's home. 

In the case of assisted living or home care, it can be foggy. Assisted living residence or home is considered a resident, not a medical facility. In addition, the deduction is limited to people who can't perform five of the six daily activities, such as eating, continence, bathing, dressing, toileting, and transferring. In such cases, you can only deduct a portion of the expenses used directly for nursing care or physical therapy.

Avoid These Medical Deduction Mistakes

There could be mistakes in most tax matters, including complex medical deductions. It is best to seek help from a professional to help avoid common mistakes on deductions. Here are some errors:

  • Missing available deductions are mostly committed by people not conversant with the tax code. For example, you could miss deductions like health insurance and Medicare premium deducted from paychecks.

  • Not knowing your state's rules is another common problem with medical deduction. However, you can benefit from some intangible areas even with insufficient deductible expenses. For example, some states, like New Jersey, allow a deduction of medical expenses over 2% of their income. 

  • Poor recordkeeping is another possible error where people fail to keep records of their returns since they are not using documents to claim medical deductions. It is important to keep copies of receipts and billing statements to submit during an audit by the IRS. In addition, having records will make it easy to calculate your deductions on your tax returns.

Health Savings Accounts: An Alternative to Consider

HSA is an alternative for saving for those unable to itemize federal deductions. HSA account contributions and withdrawals are tax-free and tax-deductible for medical expenses. However, you must have an eligible high-deductible health insurance plan to enroll in a health saving account. 



Pat Raskob
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