Clarification of Qualified Medical Deductions

Tax and Money Tip of the Week
October 19, 2011 | No. 64
Clarification of Qualified Medical Deductions

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.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®

…until next week.

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