care payments for alzeihmers as medical expense?

[nwtaxlady]

I have an elderly client that has Alzheimer's and has moved in to live with his son and daughter in law. He can no longer live at home. He also has an attorney who has Conservatorship, who sends me all the tax documents etc.

He included the court documents that states that client is to pay $3300 a month to the daughter-in-law for care. On top of that the court has ordered him to pay $39,600 for the past year. The Conservator prepared a 1099-misc for $69,300 from my client to the daughter-in-law.

If it wasn't for living with the son and daughter-in-law he would be in a memory care facility. My question is can he deduct any of this for medical expenses? If so how much?

Thanks!!

[FEDUKE404]

Perhaps a medical deduction + income

Interesting question. . .and I don't know the answer.

In general, care for a person with advanced Alz is a qualifying medical expense. But that is normally to an assisted living facility or similar.

Can "payments" to a (non-professional?) family member qualify as such for a potential medical deduction? Might not fly.

Of course, now the daughter-in-law will have to cough up some serious taxes for her abundant Form 1099-MISC income. . .

Keep us posted.

FE

[ttbtaxes]

Take a look at Baral v. Comm'r, 137 T.C. No. 1 (7/5/2011).

In Baral, the Tax Court ruled the services by a a non-licensed caregiver but were pursuant to a plan of care prescribed by a licensed health care practitioner and therefore were qualified long-term care services as defined in Code Sec. 7702B(c).

[TAXNJ]

Take a look at Baral v. Comm'r, 137 T.C. No. 1 (7/5/2011).

In Baral, the Tax Court ruled the services by a a non-licensed caregiver but were pursuant to a plan of care prescribed by a licensed health care practitioner and therefore were qualified long-term care services as defined in Code Sec. 7702B(c).

Very good research.

[Kram BergGold]

addendum

The caregiver is not subject to SE tax.

[FEDUKE404]

Dealing with SE tax for services rendered

The caregiver is not subject to SE tax.

I was waiting for someone to address the SE tax issue. . . already have my popcorn ready to watch the "discussion."

For this specific situation, do we know which box of the Form 1099-MISC shows the income?

Some on the TTB board would (rightfully or wrongfully) feel that SE tax does apply, based upon the circumstances and/or the answer to the above.

In any case, the daughter-in-law will not be a happy camper paying (at least) income tax on that unexpected ~$79k of new income.

FE

[nwtaxlady]

Well folks....interesting you should ask!

When I first saw these figures, I was concerned about now having to deal with a household employee situation and having to issue a W-2 after the fact. Well, that is not the case. My client who is the elderly man, is not living in his own home....he is living with his son and daughter-in-law.

Also, the attorney, who has court appointed Conservatorship for my client, prepared the 1099-misc. And he put $69,300 in box 7. Which includes (again court ordered) $39,600 for the past year and then $3,300 per month. Now the wording in this court document uses the term Guardian. Here let me quote this.

"The Court finds that the Guardian has provided substantial services for the Protected Person including food, shelter and direct services to him. The Guardian's Fee in the amount of $39,600 is reasonable for the past year and $3,300 per month stipend is also reasonable payable out of the Protected Person's funds, prospectively."

We know he has Alzheimer's and can't live on his own. Again, I did not prepare the 1099-misc, and nor is she my client.
My client is the elderly man, who paid this out of his funds.
My question is can he deduct any of this as medical expenses, just as would if he went to a "Memory Care Facility" or what we most commonly call a nursing home.

[TAXNJ]

When I first saw these figures, I was concerned about now having to deal with a household employee situation and having to issue a W-2 after the fact. Well, that is not the case. My client who is the elderly man, is not living in his own home....he is living with his son and daughter-in-law.

Also, the attorney, who has court appointed Conservatorship for my client, prepared the 1099-misc. And he put $69,300 in box 7. Which includes (again court ordered) $39,600 for the past year and then $3,300 per month. Now the wording in this court document uses the term Guardian. Here let me quote this.

"The Court finds that the Guardian has provided substantial services for the Protected Person including food, shelter and direct services to him. The Guardian's Fee in the amount of $39,600 is reasonable for the past year and $3,300 per month stipend is also reasonable payable out of the Protected Person's funds, prospectively."

We know he has Alzheimer's and can't live on his own. Again, I did not prepare the 1099-misc, and nor is she my client.
My client is the elderly man, who paid this out of his funds.
My question is can he deduct any of this as medical expenses, just as would if he went to a "Memory Care Facility" or what we most commonly call a nursing home.

Did you miss the reply post by poster TTBTAXES? Should give you best insight how to handle your issue

[FEDUKE404]

Word play

Did you miss the reply post by poster TTBTAXES? Should give you best insight how to handle your issue

I did review the helpful court ruling ( https://www.ustaxcourt.gov/InOpHisto...AL2.TC.WPD.pdf ).

The only thing that might concern me (bring on the lawyers!) is whether the daughter-in-law is being paid for "services" . . . or is just receiving a "fee" as stated in the legal jargon provided.

Whatever the answer is may / may not make a difference to both parties involved.

Interesting case.

FE

[TAXNJ]

I did review the helpful court ruling ( https://www.ustaxcourt.gov/InOpHisto...AL2.TC.WPD.pdf ).

The only thing that might concern me (bring on the lawyers!) is whether the daughter-in-law is being paid for "services" . . . or is just receiving a "fee" as stated in the legal jargon provided.

Whatever the answer is may / may not make a difference to both parties involved.

Interesting case.

FE

Think the Original Poster is questioning if the amount paid can be classified as medical expenses not the daughter-in-law's issue of how to handle the income.

Yes, when in doubt, might be wise to consult an attorney.

[FEDUKE404]

Looking at both sides, now

Think the Original Poster is questioning if the amount paid can be classified as medical expenses not the daughter-in-law's issue of how to handle the income.

Yes, when in doubt, might be wise to consult an attorney.

Hence why I previously mentioned "both parties."

Is dad paying a fee or a medical expense?
Does the daughter-in-law have taxable income?

"Better call Saul!! . . ."

FE

[TAXNJ]

Hence why I previously mentioned "both parties."

Is dad paying a fee or a medical expense?
Does the daughter-in-law have taxable income?

"Better call Saul!! . . ."

FE

Do your CLIENTS pay you a fee or tax preparation expense?

Do YOU have taxable income?