Disabled Daughter Deductions

[photoman]

I have a client with a 20 year old daughter that they claim as dependent. This all happened in 2010. She was a full time student. She now is in a wheelchair.This is permanent. As well as claiming her as a dependent I intend to take deductions for Capital Expenses as they added an addition to the house that has a wheelchair ramp. The total addition is for her and it cost 36000. The ramp is maybe 4000 of this and I wonder if since realestate is in the dump if this really added any value to the main house(its attached and has access from main house) Any comment on this.
Also I am taking unreimbursed medical bills, miles for travel to hospitals and daily room charge for motel(50 each). Any comments on this or any other items or things I can deduct as far as credits or deductions.
Thanks in advance

[KBTS]

If they have never itemized their medical deductions before and you have large amounts of expenses to claim, make sure you have the original bills or statements from the providers. I had a client get audited that went though a similar situation. They had never claimed any medical expenses on Sch A and then had huge bills in the year of their child's accident. This must have been a red flag to the IRS and they were audited. Canceled checks are not enough to prove the deductions - even though during the audit more than one IRS phone rep told me they could be used. Then I sent in copies of all the bills and the IRS managed to lose the entire package. It took forever to finally get the audit closed with no change.

[photoman]

Thanks for the advice

This was my first case like this and your help is much appreciated
Ron

[FEDUKE404]

Claiming improvements is an option

I have a client (adult) who is in a similar situation, albeit the medical issues are deteriorative and not sudden as your example with the young girl.

Several improvements/modifications to the house have occurred within the past few years, such as ramp, door widening, bathroom access, and even kitchen cabinets being "lowered."

There is simply NO correct answer, especially in today's market, as to what (if anything!) was added to the value of the home.

We finally decided to be somewhat aggressive by first getting itemized costs from the contractor for the specific "medical" improvements (such as special shower but not repainting/retiling the bathroom) and then using that amount. Unless the IRS auditor is truly having a bad day, that is a reasonable and conservative approach.

As others have noted, the sudden increase in medical expenses might cause a flag in the screening process. Be sure your client has firm payment information (easier to obtain now than later!) and proceed as you stated.

FE

[Burke]

As others have noted, the sudden increase in medical expenses might cause a flag in the screening process. Be sure your client has firm payment information (easier to obtain now than later!) and proceed as you stated.FE

I don't think the red flag occured due to differences between one year and the next, but more likely due to the large amt being over the average guidelines the IRS uses. Many people believe this, however. They ask me all the time if it will cause a red flag. My opinion is, only if the return falls out due to current deductions. But my experience is, on audit, the reviewer does not even have the prior returns. They ask the TP to bring in the prior year as well as current year, so they can review the trend over 3 tax periods.

[snowshine]

Home improvents to increase access such as ramps, bars, lowered counters, etc are never considered to add to basis and can be deducted in the year paid. Capital improvements such as central air (for asthmatics), elevator/staitlifts, whirlpools and the like are deducted to the extent that their cost exceeds the increase in basis. I'd say this entire expense is likely deductible.

Do make sure they can get a note from a Dr saying the structural changes are required for accessabilty issues.

[Burke]

I agree with above and I tried to advise my father-in-law to deduct such improvements a few years ago. He said it didn't matter, that he didn't have to pay any taxes. So I said, oh so you get a refund? Nope. No refund, no payment. Never do. Hmmmm........., hard to believe he breaks even every year. Does he really need to file? Well, if I could only look at his tax return......... not a chance.