Household Employer ?

[nwtaxlady]

Taxpayer is elderly man. He has someone care for him ...his household employee. He added her onto his car insurance because he is no longer able to drive and has his household employee drive him to doctors appointments etc. When he added her onto his car insurance, his rate doubled because apparently she had a ticket come to find out. So would that added cost to him be 1). Included in her W-2 wages? 2). Deductible to him as a medical expense? or 3). do nothing with it?

Thanks

[mastertaxguy]

Medical Mileage or Wages or something else?

1. If TP keeps accurate vehicle expense record he may be able to deduct, as medical expense, that percentage of vehicle expenses.
2. Of course, #1 works only if the 'standard' medical mileage rate of $.235 for 2014 is less than the actual expense percentage.
3. Maybe he should sell the car to the household employee and let her deal with the costs?
4. He cannot (legally or properly) add the additional auto insurance cost to his standard mileage amounts (if any).
5. If he treats her use of his vehicle as an employee fringe benefit, then there probably would be some sort of lease inclusion or imputed value. See (I think) TTB 16-6, bottom half of page.

[Burke]

I agree with #3. If he no longer drives, he has no need to own a car, or to assume liability for any possible accident or lawsuit for anyone on his insurance. Get rid of the car, and pay for a cab if necessary, or let her drive him in her car. Would be less expensive too in the long run, no gas, no insurance costs, no taxes, no car payment, no repairs and maintenance, etc.

[oceanlovin'ea]

But

BUT.....when people get old and can't drive anymore they still want to have their car. It is like taking away their last shred of independence. I know....I am going through it with my mother. She can't drive but wants to keep her car so we can drive it to take her places. I can take her in my car but my brother has a truck that she can't get in. If she didn't keep her car, I would have to take her everywhere. This way he can help. But we had to add him on the title since they took her license away and gave her an ID card.

GETTING OLD IS NO FUN!!!!!!!! FOR ANYONE

Linda, EA

[Burke]

But you are family. In the OP, he was dealing with a caretaker-employee who had a driving record, and who was added to his insurance. Big difference. I'm a great believer in if it can happen, it will happen. I have an estate right now which is tied up in court due to a lawsuit for wrongful death.

[nwtaxlady]

Taxpayer won't get rid of his car. Back to question.

Taxpayer won't get rid of his car. So just the "extra" amount he is having to pay to have his household employee on his insurance, is it added to her W-2 wages?
and or can he claim that extra amount as a medical expense? It is an extra cost to him because he has an household employee. She does not own a car. She borrows her Mom's when needed. And of course this elderly man wants her to drive him to Dr. Appointments etc. in HIS car. He's a big man and so bigger car and easier for him to get in & out of.

[mastertaxguy]

Medical mileage/wages or something else?

1. The original query was whether the increased cost of auto insurance could be taken as a medical expense deduction on schedule A.
2. We seem to have gotten off point and I may be to blame.
3. Insurance on a vehicle is part of expenses of operating. If it works that the TP's actual vehicle expenses when applied to his medical mileage are greater than the standard mileage amount (because of all vehicle expense including insurance), then it makes sense to use actual expense. Of course record keeping including total mileage for the year and total medical mileage is needed.
4. I cannot find any authority for claiming the increased cost of vehicle insurance in this scenario as a medical, not medical mileage, expense.
5. Thus my response to the query is no, the increased cost is not a medical expense outside of vehicle medical mileage if the 'standard' mileage amount is to not taken.
6. The fact that the taxpayer is attached to the vehicle for any reason does not change the result.

[Burke]

I agree. No add'l medical deduction added to SMR. And to answer the other question, no, it is not additional compensation to her either. The extra expenditure is for his benefit, not a fringe benefit to her.

[nwtaxlady]

Ok.. onto my next question.

I understand, he only gets to take medical mileage. I was just looking for if he could deduct that extra expense since it is related to his care.

Ok... onto next question. So he has this Household employee to care for him. She cooks for him, does his laundry, helps with bathing, getting dressed etc. He would not be able to do these things on his own (without falling). He's 88 yrs old. So can he deduct her W-2 Wages anywhere?
He is paying for a household employee instead of going to a "home" or care center.

[mastertaxguy]

Home Health Care as medical expense

I understand, he only gets to take medical mileage. I was just looking for if he could deduct that extra expense since it is related to his care.

Ok... onto next question. So he has this Household employee to care for him. She cooks for him, does his laundry, helps with bathing, getting dressed etc. He would not be able to do these things on his own (without falling). He's 88 yrs old. So can he deduct her W-2 Wages anywhere?
He is paying for a household employee instead of going to a "home" or care center.

1. I take the position that such expenses as described are a medical expenses. See TTB P. 4-7, top right column.
2. Depending on what State TP is located, and of course income/assets, TP may be eligible for medicaid waiver payments. In some instances, LTC policies may pay the caregiver.
3. On an unrelated issue, I do hope someone did a background check on the household employee, and someone else is watching the check book and any "valuable household items." TP probably would not benefit from a theft loss.
4. I WISH TO MAKE IT CLEAR THAT I AM NOT THE PREPARER OF THIS TAXPAYER'S RETURN.

[mastertaxguy]

Home Health Care as medical expense

I understand, he only gets to take medical mileage. I was just looking for if he could deduct that extra expense since it is related to his care.

Ok... onto next question. So he has this Household employee to care for him. She cooks for him, does his laundry, helps with bathing, getting dressed etc. He would not be able to do these things on his own (without falling). He's 88 yrs old. So can he deduct her W-2 Wages anywhere?
He is paying for a household employee instead of going to a "home" or care center.

1. I always take the position that such expenses for such services as described are medical expenses. See TTB P. 4-7, top right column.
2. Depending on what State TP is located, and of course income/assets, TP may be eligible for medicaid waiver payments. In some instances, LTC policies may pay the caregiver.
3. On an unrelated issue, I do hope someone did a background check on the household employee, and someone else is watching the check book and any "valuable household items." TP probably would not benefit from a theft loss.

[Burke]

Ok... onto next question. So he has this Household employee to care for him. She cooks for him, does his laundry, helps with bathing, getting dressed etc. He would not be able to do these things on his own (without falling). He's 88 yrs old. So can he deduct her W-2 Wages anywhere?
He is paying for a household employee instead of going to a "home" or care center.

It is likely that at least some of the wages can be deducted as medical expense. See also Pub 502 which discusses this in some detail, including the pro-rating of medical care and personal care duties. Note that when the caretaker is doing all of the above tasks (who is not a nurse) it appears that some the duties would be allowed as a medical expense if recommended by a medical care professional -- (i.e, his doctor.) Cooking, bathing, dressing, etc are fine and are listed in the ADL's for LTC. Not so sure about laundry and housecleaning even if he cannot do them on his own. He could hire a housekeeper for these functions. TP's cannot deduct general housekeeping expenses.

[mactoolsix]

Sorry for the late post, but I've gotten behind on following this forum.

It appears to me from one of the above posts that this taxpayer maybe able to deduct a substantial portion of the caregivers services (more than usual medical care).

From Pub 502:

Qualified Long-Term Care Services

Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:

Required by a chronically ill individual, and

Provided pursuant to a plan of care prescribed by a licensed health care practitioner.

Definition:
Chronically ill individual. An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions.
He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.

He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

Maintenance and personal care services. Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment).

Mike

[Burke]

I agree with all of the above, but I do not believe general housekeeping duties would fall into that category, such as cleaning the house. However, that may be a minimal part of the duties.