Imputed LDA deductibility

[JenMO]

Client pays for live in boyfriend and his son under a LDA arrangement with her employer. Looking over her final paystub, we discovered imputed LDA amount, but she says they take it all out of her paycheck every pay period. Is there any deductibility on her Sch A, or perhaps his? It's a substantial amount of premiums and looking for a way to use it.
First time I've seen this.

[Burke]

Well, I'll bite. What the heck is LDA?

[JenMO]

Legally domiciled adult. Some companies allow you to put your live- in and live- in's children on your health insurance. I had to google it to understand better. What I'm wondering if it could be a health insurance deduction on either the employee's Sch A, or the legally domiciled adult's Sch A. Both file their own tax return.

[joanmcq]

Unless the boyfriend is the dependent of your client, I don't think either of them can deduct the health care expenses. She can only deduct the her expenses or her dependent's expenses. He hasn't paid them, so he can't deduct them.

[BP.]

She can only deduct the her expenses or her dependent's expenses.

This may or may not be applicable in your case, but there is a relaxed definition of "dependent" for the purpose of deducting medical expenses. Mainly, the gross income test is eliminated.

Pub 17, p. 145- "You can include medical expenses you paid for an individual that would have been your dependent except that: 1. He or she received gross income of $3,700 or more in 2011." Also discussed on TTB p. 4-5.

If the premiums were paid after tax, it is possible they would be deductible by the employee.

[JenMO]

I read the same in TTB. Boyfriend works, but her insurance is better than his. For what she pays in premiums, her support is substantial, but I don't think insurance premiums are considered support. I'm just trying to get a deduction out of a premium paid, and they being responsible enough to pay for medical insurance. Why penalize those who pay? There are too many who let the gov't pay for their medical expenses. (Sorry, a soapbox item with me)

[BP.]

For what she pays in premiums, her support is substantial, but I don't think insurance premiums are considered support.

If "substantial" equates to over 50% . . . Check out pub 17, p. 34, worksheet 3-1, line 16 for consideration of medical expenses as support item.

[JenMO]

If that works, wouldn't the deduction fall under the special provisions that TTB talks about?

[Burke]

The gross income test might be eliminated when considering the deduction of medical expenses, but the support test would not. Does she provide over one-half of his support? Medical expenses do count as support. Also, does the relationship test fly? (Was a member of the household all year where relationship does not violate local law?)