Clarification of Qualified Medical Deductions | Tax Tip of the Week | No. 113

Tax Court Clarifies Qualified Medical Deductions

Up until now, it has been unclear what medical expenses are eligible for a tax deduction.  A strict reading of the prior rules seemed to indicate only expenses incurred to pay for “skilled” caregivers was a qualified expense.In a recent case (Est. of Baral, 137 TC No. 1) the Tax Court ruled that costs of a caregiver for a dementia patient qualifies as a medical expense.  In this case, a mother was diagnosed with the disease and her doctors determined she needed 24-hour supervision.  Her son hired caregivers to assist her.  Although the caregivers were not licensed health care providers, the payments were deemed as medical expenses.  Her doctor certified that her dementia endangered her health because she otherwise would not take her medications.Furthermore, the Court ruled that such deductions are not limited to dementia patients.  The cost of personal care services qualifies for a medical expense for any patient unable to perform at least two of the six activities of daily living—eating, toileting, transferring, bathing, dressing and continence.  The certifying professional can be a doctor, registered nurse or licensed social worker.If you know of anyone in this situation, please let them know.  These patients definitely need every break they can get.As always, we are just a phone call away to discuss this and other issues in greater detail.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.Rick Prewitt - the guy behind TTW...until next week.