Medical expenses, and lots of 'em

[Possi]

My client mentioned earlier in the Inherited IRA string, was diagnosed with leukemia in 2009 and was hospitalized in 2009 and 2010 to the tune of over $392,000.

Her bills are in collections now.

I am preparing her 2009 tax return where she took some IRA distributions. (She was unable to work since '08 for being so sick all the time, even before the diagnosis).

She has not paid the hospital or the oncologist. Are the medical expenses deductible when they are billed, or when they are paid?

I thought it was when they were billed. If so, it will help her on her tax return. The 2009 stay was Nov and Dec and wasn't billed until after Jan of 2010.

[ChEAr$]

My client mentioned earlier in the Inherited IRA string, was diagnosed with leukemia in 2009 and was hospitalized in 2009 and 2010 to the tune of over $392,000.

Her bills are in collections now.

I am preparing her 2009 tax return where she took some IRA distributions. (She was unable to work since '08 for being so sick all the time, even before the diagnosis).

She has not paid the hospital or the oncologist. Are the medical expenses deductible when they are billed, or when they are paid?

I thought it was when they were billed. If so, it will help her on her tax return. The 2009 stay was Nov and Dec and wasn't billed until after Jan of 2010.

I have yet to meet an accrual basis individual taxpayer as a client; doubt there are any in existence really.

So it's when paid; not accrued.

[Burke]

That is correct. Expenses deducted in actual year paid by cash or check, but they are also allowed for those charged on a credit card for which the bill does not come due until the following year. Since her bills are in collections now, some of them may be eventually written off. I know this is not the answer you want. TP's are often advised to pre-pay certain expenses in the current taxable year so that they can be deducted.

[FEDUKE404]

Only when PAID

Medical bills, as well as such things as property taxes, have always been deductible only in the calendar year when actually PAID. A bill/invoice does not quite count as a deduction.

As others have noted, the only wiggle room is that something is considered "paid" if it is charged on a credit card even if the credit card balance is paid in a later year.

I don't foresee anyone walking in the door who files their personal income taxes on the accrual basis. Is there even such a thing?

FE

[Possi]

got it...

Thanks for the info.
This is such a sad case, and I still do tax returns with my heart... thanks for putting my head back into it.