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medical expenses

Q&A: The fine print on deducting medical expenses

October 7, 2024 By Liz Weston

Dear Liz: I take $5,000 per month out of my brokerage account (and the $1,400 in taxes when I withdraw the money) for my husband’s Alzheimer care facility where he now lives 24/7. Can I only claim that on my taxes under medical expenses if I itemize my deductions on my taxes? I don’t have any other deductions.

Answer: Your husband’s expenses may be enough to justify itemizing even if you don’t have other deductions.

The standard deduction for married couples in 2024 is $29,200. To itemize, your deductions would need to be higher than that amount. Furthermore, medical expenses must exceed 7.5% of your adjusted gross income to be deductible, notes Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

If your husband meets certain criteria, however, the deduction can include the expenses related to meals and lodging at the facility as well as the medical care portion, Luscombe says.

A licensed healthcare professional must certify annually that your husband is chronically ill and living in the care facility due to medical necessity, he says. A tax pro or the facility itself can provide further details.

Filed Under: Q&A, Taxes Tagged With: long term care, medical expenses, Taxes

Wednesday’s need-to-know money news

February 19, 2020 By Liz Weston

Today’s top story: When and how to say no to extended car warranties. Also in the news: How to save money with used baby items, medical expenses you can deduct on your taxes, and why you really need to set up automatic credit card payments.

Extended Car Warranties: When and How to Say No
Don’t pay for something you may never use.

New Baby? Save Money With These Used Items
You’ll only use them for a brief time.

Which medical expenses can you deduct on your taxes?
No, you can’t deduct your medical weed.

You Really Need to Set Up Automatic Credit Card Payments
Never miss a due date again.

Filed Under: Liz's Blog Tagged With: automatic credit card payments, baby items, extended car warranties, medical expenses, tax deductions, tips

Monday’s need-to-know money news

February 10, 2020 By Liz Weston

Today’s top story: Should your student loans and your spouse’s get hitched? Also in the news: Investing vs paying student loans, the blunt truth about medical expenses, marijuana, and your tax returns, and how to figure out your finances when you’re single.

Should Your Student Loans and Your Spouse’s Get Hitched?
A look at the pros and cons.

SmartMoney Podcast: ‘Should I Invest or Pay Down My Student Loans?’
Where should your money go?

Blunt Truths About Medical Expenses, Marijuana and Your Tax Return
The IRS needs to chill.

How to Figure Out Your Finances When You’re Single
Making the budget that works solely for you.

Filed Under: Liz's Blog Tagged With: budgets, couples and money, investing vs paying off student loans, medical expenses, medical marijuana, SmartMoney podcast, Student Loans, tax deductions

Thursday’s need-to-know money news

December 5, 2019 By Liz Weston

Today’s top story: The pros and cons of airline credit cards. Also in the news: How to maximize your points and miles this holiday season, your car crash checklist, and how to maximize the tax benefits that come with medical expenses.

Are Airline Credit Cards Worth It?
The pros and cons.

How to Maximize Your Points and Miles This Holiday Season
Giving yourself a gift.

Your Car Crash Checklist: 6 Life- and Money-Saving Tips
What to do before and after.

Medical expenses come with tax benefits. Here’s how to maximize yours this year
The average American spends $17K on healthcare per year.

Filed Under: Liz's Blog Tagged With: airline credit cards, car accidents, checklists, medical expenses, miles, reward points, tax benefits

Tuesday’s need-to-know money news

October 10, 2017 By Liz Weston

Today’s top story: 7 signs you’ve gone from frugal to cheap. Also in the news: 7 ways to avoid becoming a scary student loan statistic, following the lead of Millennials to save more for retirement, and retirement community fees that can be deducted as medical expenses.

7 Signs You’ve Gone From Frugal to Cheap
A slippery slope.

7 Ways to Avoid Becoming a Scary Student Loan Stat
Don’t become a statistic.

To Save More for Retirement, Follow These Millennials’ Lead

You can deduct these retirement community fees as medical expenses
Unexpected savings.

Filed Under: Liz's Blog Tagged With: cheap, frugal, medical expenses, millennials, retirement communities, retirement savings, Student Loans, tax deductions

Q&A: Deducting medical expenses racked up by another person

June 19, 2017 By Liz Weston

Dear Liz: I recall reading that an individual could deduct unlimited medical expenses for another person, as long as the provider was paid directly. Looking at IRS Publication 502, it appears that now only a “qualifying relative” (the closest I could get to eligibility) is eligible for a deduction on another person’s return. I’m asking because my sister is helping with my medical expenses, and I had hoped to give her a deduction. Her tax person is insistent that she cannot take a deduction for my expenses. I don’t qualify under the “qualifying relative” clause because she doesn’t provide more than half my support. Have I always misinterpreted this rule, or has the rule changed recently?

Answer: You’re confusing the medical deduction rules with the gift tax exemption.

The gift tax rules require givers to file tax returns for gifts in excess of $14,000 per recipient, unless the giver paid medical or tuition expenses directly to a provider (such as a hospital or college). Paying these expenses isn’t considered a gift, so your sister can pay an unlimited amount of your medical bills without having to file a gift tax return or counting those gifts toward her lifetime exclusion amount, which is currently $5.49 million. Gift taxes aren’t owed until that lifetime exclusion amount is exceeded.

Your sister can deduct medical expenses from her income taxes only when she pays them on behalf of herself, her spouse, her dependents and her “medical dependents.” Claiming someone as a dependent or medical dependent requires that she provide at least half that person’s support. Only the amount of qualifying medical expenses that exceed 10% of her adjusted gross income in 2017 would be deductible.

Filed Under: Q&A, Taxes Tagged With: deductions, medical expenses, q&a, Taxes

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