Taxpayer received a 1099-misc with $400 in box 7 from a research institute for reimbursement to carry her disabled husband to therapy several times. Is it taxable?
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Don't Think So
...or at least I wouldn't file it that way, my TN compadre.
Not that anything has to make sense with our taxation system. But if you were to deduct the mileage (16.5 cents), they would chop off 7.5% of the AGI. The "assistance" spoken of is surely mileage reimbursement or reimbursement for extra help in handling or transporting.
I don't think in the right mind of the IRS this could be considered income unless somehow the reimbursement exceeded the cost of transporting.
And instead of doing something about controlling medical cost, the government will be mandating an increase in the 7.5% chop-off to 10.0%. Not only are they not going to do anything about it, they're also not going to pay for it. I remember when the threshhold was only 3.0%.Comment
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Not exactly a clear situation
I think the issue here is that the payment was, likely, NOT a "reimbursement" of otherwise valid medical expenses (which at worst could just offset otherwise deductible medical expenses on Schedule A).
It is quite frequent in this area for medical entities to recruit patients for clinical trials of new medications, treatment schemes, or whatever. Depending upon the amount of patient time and/or overall inconvenience involved, these fees can be quite substantial and are even advertised as such in the newspapers.
A person who is willing to spend a weekend in a hospital and get blood samples etc taken every couple of hours can easily come home with a check exceeding $1k (and also incur no medical expenses).
Were these to be true medical costs in the traditional sense, then I probably would consider some offset to all other medical expenses. OTOH, the presence of a Form 1099-MISC definitely muddies up the waters and makes me think this is more of a "guinea pig" fee than a medical reimbursement per se.
FEComment
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Caretaker
Or, were they paying the spouse to take care of her husband? Instead of hiring an outsider?Comment
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This is not the case. He got hurt a few years ago, causing him to lose a leg. Since then he has had a stroke and lost half his stomach, not to mention numerous bouts of pneumonia. The wife said that the money is to reimburse her for trips back and forth for therapy. Last year she had a similar 1099 from the same company with $300 in box 7. I included it then in line 7 wages on the 1040, but I am wondering if that is right. If it is not taxable, do I include it with wages and then take it out on line 21?Comment
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Clarification is needed here
Per the original post, why exactly is the client receiving funds from a "research institute" ??
I think the complete answer to that question might be beneficial to this discussion.
FEComment
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I googled Sarah Cannon Research Institute and learned that it conducts advance therapies and clinical trials, along with testing and developing drug therapy in a few areas. After having much of his stomach removed, he traveled a few miles each day for therapy. We have several clinical research programs in our area, and it is common to be paid money for travel. Apparently it must be figured per trip instead of per mile as the amounts are round figures - $300 and $400.Comment
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Regardless
I would think regardless on how the Clinical Trial is arriving at the amount paid - it would be taxable income other, not subject to SE on Line 21.
Your t/p would then keep track of the medical miles and deduct under Medical Miles, Schedule A.
SandyComment
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Thanks everybody! I posed the same question on the ATX forum and the few people who answered thought it would be taxable. They are in the 10% bracket so it is not a lot of extra tax anyway, but I certainly wanted to do it correctly.
Severe thunderstorms are heading our way, had cancellations this morning, so it looks like I will be able to work on the looooooong return that has been staring at me.Comment
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