A Medical Expense Question

[Aviator]

This is going to sound strange and it may be a "no brainer" but I have never encountered it before...

Client has just over $2,000 of dental work perfomed in year 2006. The client took a PERSONAL, unsecured loan from a lending institution to pay for the dental procedures. (Could have taken a loan using personal residence as collateral but chose not to do so even though the home is mortgage-free.) The lending institution paid the dental bill DIRECTLY and now the client is repaying the lending institution on a monthly basis for the loan.

I appreciate the fact that any interest paid on the personal loan is non-deductible but I'm a little befuddled about the principal amount paid on behalf of the client by the lending institution for these deductible dental expenses. My research in TTB, IRS Section 213, IRS Pub 502, etc., implies that deductions are allowed for what YOU pay for medical expenses. Is client entitled to this deduction? Am I splitting hairs because the expense was paid by a third party directly and not by the client directly?

I would sure like to use the deduction for the client but under these circumstances?...I don't know.

As I stated above, this may be a "no brainer", but I would sure welcome any input from board members.

Aviator

[Jiggers]

Take the medical expense

This is going to sound strange and it may be a "no brainer" but I have never encountered it before...

Client has just over $2,000 of dental work perfomed in year 2006. The client took a PERSONAL, unsecured loan from a lending institution to pay for the dental procedures. (Could have taken a loan using personal residence as collateral but chose not to do so even though the home is mortgage-free.) The lending institution paid the dental bill DIRECTLY and now the client is repaying the lending institution on a monthly basis for the loan.

I appreciate the fact that any interest paid on the personal loan is non-deductible but I'm a little befuddled about the principal amount paid on behalf of the client by the lending institution for these deductible dental expenses. My research in TTB, IRS Section 213, IRS Pub 502, etc., implies that deductions are allowed for what YOU pay for medical expenses. Is client entitled to this deduction? Am I splitting hairs because the expense was paid by a third party directly and not by the client directly?

I would sure like to use the deduction for the client but under these circumstances?...I don't know.

As I stated above, this may be a "no brainer", but I would sure welcome any input from board members.

Aviator

Take the medical expense.

Doesn't matter that the lending institution paid the expense directly. This is no different than purchasing a business asset such as a building or vehicle and the lending institution sending the check directly to the seller, is it?

[JohnH]

I wouild take it

The third party paid the expense, but the taxpayer is legally required to repay the loan. This would be no different than using a credit card to pay the expense. The only time the t/p would not be able to take the deduction would be when a third party pays the dentist with no expectation that the taxpayer would repay them.

Of course, this all assumes that the dental expense itself qualifies to be deducted in the first place.

[Aviator]

A Medical Expense Question

Thank you, JohnH and Jiggers for your responses. I was leaning toward taking the deduction but there are times when I tend to be a little too narrow in interpreting rules and regulations with this situation being one of those examples. The analogies you both used in explaining why such a deduction would be proper was well taken.

It's nice to have a message board such as this to use as a sounding board as well as obtain good advice.

I really appreciate your help.

Aviator

[jim s]

Medical Expence

Thank you, JohnH and Jiggers for your responses. I was leaning toward taking the deduction but there are times when I tend to be a little too narrow in interpreting rules and regulations with this situation being one of those examples. The analogies you both used in explaining why such a deduction would be proper was well taken.

It's nice to have a message board such as this to use as a sounding board as well as obtain good advice.

I really appreciate your help.

Aviator

Wells Fargo does this alot, they are refered to the clients by their dentist to charge the bill with no interest so the client would get a free credit card for 12 months, after that there hook at a high interest rate...jim s