ElderLaw News-The Estate Planning & Elder Law Firm, P.C. — MD, VA, DC
ElderLaw News
ElderLaw News is a weekly e-newsletter that brings you reports of legal developments and other trends of vital interest to seniors and their advocates. This newsletter is brought to you by The Estate Planning & Elder Law Firm, P.C., William S. Fralin, Esq., President., William S. Fralin, Esq., President.

Deducting Care Expenses and What You Should Know

It's tax season.

After assisting a number of clients with questions pertaining to the deductibility of care expenses on a personal tax return, The Estate Planning & Elder Law Firm, P.C. decided it would be good to relay common concerns pertaining to the deductibility of care expenses for a loved one. To deduct care services, it is important to note who and what services you may include in the deduction.

1. Whose Medical Expenses May You Deduct?

The IRS has indicated that, generally, you may "include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent when the services were provided or when you paid for them." While determining whether you were married at the time the expense was incurred or paid for is relatively simple, determining whether a person qualifies as a dependent is often more challenging.

IRS Publication 501 sets for the requirement that in order to claim someone as a dependent on your tax return, that person must be a "qualified child" or a "qualified relative." Generally, our clients seek to determine whether their loved one is a "qualified relative." To qualify as a "qualified relative," you must determine that 1) the individual is not your qualifying child or the qualifying child of another, 2) the individual lives with you all year as a member or your household or falls within a list of relatives that does not need to live with you, 3) the individual has gross income below $3,900 for the tax year 2013, and 4) that you have provided more than half of their total support during the calendar year. That said, the IRS, in Publication 502, allows someone to include the medical expenses associated with an individual who, in addition to other things, would otherwise have been your dependent except that they failed to satisfy the gross income test.

2. What Medical Expenses May Be Deducted?

Despite what many of clients may have been told in the past, not all expenses deemed "medical" are included and IRS Publication 502 sets forth a very specific list of expenses that may be included in the medical expense deduction. Of primary concern to our clients is the cost of in-home care, assisted living, or a nursing home. While nursing services and nursing home costs are specifically included by the IRS, the costs associated with an assisted living facility must be "qualified long-term care services."

To qualify as qualified long-term care services, the services must be necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services that are required by a chronically ill individual and provided pursuant to a plan of care prescribed by a licensed health practitioner. The IRS then defines "chronically ill individual" as an individual who, within the previous 12 months, has been certified by a licensed health care practitioner as being unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) without substantial assistance from another individual for at least 90 days due to a loss of functional capacity or requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

It is important to note that while someone's medical expenses may be included in your deduction; you may only deduct those medical expenses that exceed 10% of your adjusted gross income, or 7.5% of your adjusted gross income if you or your spouse was born before January 2, 1949.


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Maryland (301) 214-2229
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The Estate Planning & Elder Law Firm, P.C.

The Estate Planning & Elder Law Firm, P.C. is an elder law firm. We represent older persons, disabled persons, their families, and their advocates. The practice of elder law includes estate planning, estate and trust administration, powers of attorney, advance medical directives, titling of assets and designations of beneficiaries, guardianships, conservatorships, and public entitlements such as Medicaid, Medicare, Social Security, and SSI, disability planning, income tax planning and preparation, care management, and fiduciary services. For more information about The Estate Planning & Elder Law Firm, P.C., please visit our website at http://www.chroniccareadvocacy.com.

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This newsletter is not intended as a substitute for legal counsel. While every precaution has been taken to make this newsletter accurate, we assume no responsibility for errors, omissions, or damages resulting from the use of the information in this newsletter. The Estate Planning & Elder Law Firm, P.C. thanks the law firm of Hook Law Center for their input to this newsletter.

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