Bewitched by Medical Deductions

Richard Streitfeld – Buddhist Mensch


Q: I am paying my mom’s substantial medical bills but she collects a pension and lives independently. Can I get any relief through my tax return?
–Samantha Stephens

A: Believe it or not — YES, under some circumstance.

You CANNOT take Granny as a dependent, the way you canTabitha. Her $18,000 yearly income from her pension exceeds the $4,050 annual gross income  threshold for claiming dependents, by a wide margin.

BUT — Let’s say you are paying mom’s rent of  $500 per month, $6,000 per year, and some of her out of pocket medical bills —  to the tune of $5,000 annually.  She pays the rest of her bills herself, about $9,000.  You have met the “support test” because you are paying more than half her “support expenses” ($11,000 out of $20,000). This means you can claim Esmeralda’smedical expenses on your own return, even though she is not a dependent.

HOWEVER — Hold on Henrietta! Claiming medical deductions is not a slam-dunk! First  — You must “itemize your deductions.” Typically if you are not a homeowner you are not eligible to itemize, you take the standard deduction.

Second — There is a “floor”, like a deductible that you must meet first.  You are 67, so your floor is 7.5% of  your andDarrin’s” adjusted gross income”, which is $100,000.  So the first  $7,500 you and your magical family, including Granny Esmeralda, don’t count. Your out of pocket medical excluding Granny come to $5,000 — under the threshold of $7,500. Add in Granny and PRESTO — you are at $10,000, and the excess of $2,500 becomes an additional tax deduction. 


Ready? If your business files as a partnership (Federal Form 1065), your returns are now due one month earlier for Federal and RI purposes, March 15, 2017. Attendant state fees of $450are due March 15 as well. You may file for a six month extension to submit the actual return. S-Corps (Form 1120 S) are still due March 15. But C-Corp (Form 1120) are now dueone month later (actually April 18 this year). Except for Mass — Still March 15! Sorry!

Print Friendly, PDF & Email

Comments are closed.