Special Needs Child

[Bjorn]

The court has ordered a Project Coordinator to review the special needs child gets proper medical care. The cost is substantial >$5,000.00 per month just to review paperwork and not actually do the day to day care.

The custodial parent is paying the fee and many other medical bills.

I'm looking for the ability to claim the review fee as medical since if the child did not have these medical problems there would be no need and what type of documentation would be necessary to prove this in an audit.

[Armando Beaujolais]

What's the situation with the parent? Why is the court involved?

It's going to depend on whether the amount is being paid as part of a diagnosis or treatment program. If the services are part of the medical care, it's going to be deductible. The code and regs are pretty far sweeping as to what's deductible for medical. Medical care in section 213 is the "diagnosis, cure, mitigation, tratment or prevention of disease or for the purpose of affecting any structure or function of the body," and it also includes transportation, so it doesn't necessarily have to be paid directly for medical care itself.

You can't deduct items just to promote general health, but this doesn't seem like it.

The person providing the care does not have to be a licensed doctor or nurse.

If the evaluation is to monitor the parent's care of the child, that might be a different story.

[Chief]

Special Needs Child

One thing in this situation is that both the federal and state levels have mandated that public schools are responsible for providing care, treatment, etc. of special needs individual.. I know that you have mentioned that the courts have ruled in this particular situation. The custodial parent would do well to retain legal counsel to explore both federal and state legislative madates and how they affect this situation.

Also as a tax guide, you need to consult the IRS Publication 602 to determine which expenses are legit medical expenses. I agree with the previous post about the general gist of medical deductions.

Schools in our nation that are not funded as well as others are beginning to seek remedy by having private insurance companies pay some of the cost for special needs students. I have seen that in Tennessee and in Florida. I suspect this may be the case in this situation.

[Armando Beaujolais]

Bjorn,

This is a really interesting question. I'm assuming a divorce court ordered a nurse to monitor the medical treatment of a child. What is the direct purpose of the expense?

I'll make another assumption that this would fall under some kind of child protection statute. Is it for medical? Or is it more in the nature of a reimbursement for child protective measures?

I'd say deduct. It's a gray area, take it.

Is the amount paid for medical service? I say yes. Even though it's monitoring for the state and not necessarily a direct medical service, yes. Consider this. If the nurse detects any negligence as far as treatment, he or she will take steps to make sure the treatment is provided. That's being part of a treatment program. Also, with regard to whether the nurse is performing medical services,

Counts v. Commissioner, July 23, 1964

"the expenses for nursing attention are considered costs of medical care and are deductible."

"Nursing attention." That's quite a broad term. When you're in the hospital for discombobulation surgery, the nurses take notes and monitor your condition. They also take records for administrative purposes, etc. This case certainly seems to fall under "nursing attention."

Also look at Rev Rul 69-499,

"Expenses incurred by a taxpayer for the purpose of maintaining his mentally retarded son at a home that cares for such cases which was recommended by a physician, and where the supervised and restricted environment provided is considered therapeutically necessary for him, constitute medical expenses for Federal income-tax purposes and are deductible in computing taxable income to the extent provided in section 213 of the Internal Revenue Code of 1954."

In that case was a situation where many of the expenses were of a nature that would not otherwise be deductible. However, the ruling allowed the expenses because they would not have been incurred if not for the medical condition.

I don't think there's any way these expenses could be attributable to anything other than the child's medical condition. The court says the monitoring by the nurse is required because of the child's medical condition. I'd say deductible.

Disclaimer: The above is not intended to be read or considered by any individual for any reason nor is it to be construed as commentary on income tax issues or any other issues that might relate to any issue whatever. Any reliance on the above comments which do not exist is the full responsibility of said practitioner who unexisted the nonexistence of the above said comments for consideration.

Don't quote me.

[jainen]

stretched this far

The court did NOT say "monitoring by the nurse is required." It isn't a nurse at all. In the ruling that you cite the supervision was prescribed by a physician and was therapeutic in nature. Neither circumstance applies here. As you suggested in your first post there are certainly non-medical reasons possible for the supervision . Courts don't make medical decisions so something else is going on here. I don't think the concept of medical treatment has been stretched this far yet.

[Armando Beaujolais]

I don't think the concept of medical treatment has been stretched this far yet.

Consider this. When you go to the doctor, you incur loads of deductible expenses that have nothing to do with the direct medical treatment. You're paying for:

Transportation
Secretarial
Claims Processing
Malpractice Insurance
Legal Fees
Accounting Fees
Etc.

Clearly those do not constitute medical treatment, but they're deductible.

I agree, there's more information needed. However, assuming the cost is directly related to medical care and would not be incurred absent the medical condition, I say deductible. The court cases I've read tended to focus on whether particular expenses were either directly connected to a specific medical condition, or whether the expenses would have been incurred anyway (food and lodging).

I believe that costs incurred to monitor a person's medical condition are directly connected to that person's medical care.

I also agree it's a gray area, and that's a good time to take the side of the taxpayer.

[Armando Beaujolais]

Let's try this as well

How about if the court ordered a medical checkup on the child, say, twice a year? Would that be nondeductible because it was ordered by a court? Of course not. No one would blink an eye about deducting it.

Why would the expense be nondeductible just because it's expensive?

[Bees Knees]

Consider this. When you go to the doctor, you incur loads of deductible expenses that have nothing to do with the direct medical treatment. You're paying for:

Transportation
Secretarial
Claims Processing
Malpractice Insurance
Legal Fees
Accounting Fees
Etc.

Clearly those do not constitute medical treatment, but they're deductible.

Well, when I go to the Dentist, I am helping to pay for his trip to Cancun. Does that mean the next time I go to Cancun, it’s deductible as a medical expense?

Of course not. The criteria here is: What was the purpose for the court ordered nurse? Was it to care for the medical needs of the child?

How does filling out paperwork treat a specific disease or medical condition?

[Bees Knees]

Transportation
Secretarial
Claims Processing
Malpractice Insurance
Legal Fees
Accounting Fees
Etc.

Clearly those do not constitute medical treatment, but they're deductible.

Actually, no they are not deductible because you didn't pay them. The doctor paid those expenses. The fee for the doctor was 100% for his services. Out of his profit, he turned around and paid for his overhead expenses. You can't justify an expense or deny a deduction based on what the person did with the money you paid to them. That is a ridiculous argument.

[Armando Beaujolais]

Actually, no they are not deductible because you didn't pay them. The doctor paid those expenses. The fee for the doctor was 100% for his services. Out of his profit, he turned around and paid for his overhead expenses. You can't justify an expense or deny a deduction based on what the person did with the money you paid to them. That is a ridiculous argument.

Not quite, Mr. Cranky. I'll concede your point about most of those expenses being paid by the doctor. However, the doctor doesn't pay my transportation costs to get to his office. Yet those costs are deductible as medical expenses.

My point was that in order to be deductible as medical expenses, the payment does not have to be directly for hands-on medical treatment.

It's tough to go too far on this without knowing more specifically what the reason and circumstances are.

However, I do know this. If you pay a medical nurse to provide a medical evaluation and process medical records for a medical reason because of a dependent's medical condition, it's a medical expense. That doesn't seem so ridiculous, does it?

Mabye Bjorn can fill us in a little more.

[Bees Knees]

Not quite, Mr. Cranky. I'll concede your point about most of those expenses being paid by the doctor. However, the doctor doesn't pay my transportation costs to get to his office. Yet those costs are deductible as medical expenses.

You like to use examples that are irrelevant. We are talking about nursing services, not transportation. You can't use any other example because tax law isn't supposed to make sense. It just exists. Medical expenses are probably the most inconsistent rules on the books, the way the courts and IRS have interpreted stuff.

Let's just talk nursing services. IRS Pub 502 says: "Nursing Services...need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient’s condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility. Generally, only the amount spent for nursing services is a medical expense. If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing house-hold and personal services and the time spent for nursing services."

I would say paperwork is not the kind of service a nurse generally provides. Supervising services is not nursing services. Since this is a divorce situation, it sounds more like the court wants a nurse to take on certain parenting responsibilities having nothing to do with a medical condition.

[Bjorn]

More data

There are multiple children. Only one has special needs, the other children are not being monitored by this nurse who reports back to the court.

If this child did not have such an extreme disability the court would not have ordered this nurse to monitor the child closely.

Thanks. What a can of worms.

[S T]

Special Needs

Seems like this special needs child could be under some type of State Social Services Dept jurisdiction due to state or federal medical benefit coverage. However, you also did not mention if this child was covered under a Special Needs Trust Arrangement, or court appointed Conservatorship.

If Court is ordering, seems like there is some type of benefits being paid outside of the Taxpayer personal funds.

Sandy

[Bjorn]

Thanks Sandy and all for your input on this matter.

The court will order a special needs trust before the divorce is done. The non-custodial parent is a very wealthy actor. All funds are being paid by the custodial parent. As mentioned earlier this fee is substantial and trying to get an answer that the world agrees on is anything but easy.