Tax guru I am not, but I thought it might be helpful to review some of the federal tax rules related to family care providers’ medical and dental expenses. Since this is a pretty long article, I’ve written it in two parts. This is Part I, and it relates to the 2009 tax season. See Part II here.
Who Qualifies:
To qualify for these credits and deductions the person for whom you are caring must be a spouse, dependent, or other qualifying relative (related to you by blood, marriage, adoption, or otherwise is a legal live-in member of your household for the full year).
What Expenses Qualify:
There is a very long list of items that qualify under “medical and dental deductions.” Some of these items are non-traditional expenses like acupuncture for palliative care. Also, included are transportation to and from medical and dental appointments, and home renovations related to medical care, such as ramp installations for wheelchair accessibility. The full list of items, known as Publication 502 can be viewed at the IRS website. An important note: deductible items include only out-of-pocket expenses that are not reimbursed by insurance, Medicaid or Medicare.
Details of Interest:
* You may only deduct the amount of your medical and dental expenses that exceeds 7.5% of your adjusted gross income. These expenses may include your expenses as well as your care recipient’s expenses.
* For a care recipient to qualify as a dependent, you must pay more than 50% of their expenses for the full year. Also the dependent’s 2009 gross income must be less than $3,650. They must not have filed jointly in 2009, and they may not be claimed as a dependent on someone else’s 2009 return. They must be related to you by blood, marriage, adoption or otherwise be a legal live-in member of your household for the full year.
* If you cannot claim the care recipient as a dependent you may still deduct their medical expenses.
* If you are sharing the cost of care for a qualifying relative, you may file a multiple support agreement (IRS form 2120). However, only one family member will receive the exemption.
Part 2 of the tax post will talk a little about long term care medical expenses. The information I have provided here only refers to federal taxes and doesn’t cover all of the details and rules applicable to caregivers. While I do highly recommend reviewing IRS Publication 502, a user friendly resource loaded with useful information, I also strongly recommend consulting a professional for advice. If you or someone you know needs a referral to an eldercare tax specialist, give me a call, 207-272-2797, or email me at lpeel@MaineSeniorguide.com