{"id":149,"date":"2011-07-07T22:27:31","date_gmt":"2011-07-07T22:27:31","guid":{"rendered":"http:\/\/ua-cpas.com\/blog\/?p=149"},"modified":"2011-07-07T22:27:31","modified_gmt":"2011-07-07T22:27:31","slug":"dementia-caregiver-expenses-tax-deductable","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2011\/07\/07\/dementia-caregiver-expenses-tax-deductable\/","title":{"rendered":"Dementia Caregiver Expenses Tax Deductable!"},"content":{"rendered":"

Dementia: A Growing Challenge <\/strong><\/p>\n

8 million Americans currently exhibit some signs of dementia and this population is steadily increasing. Eventually, few people will be spared the challenge of caring for a relative with this disease.\u00a0 In many cases, a physician may determine that the patient requires 24 hour supervision. If no relative or friend can provide the required supervision, it can result in considerable caregiver expenses. Often, people will hire unlicensed caregivers to minimize this cost.\u00a0\u00a0 In a recent Tax Court case, the issue presented was whether or not these expenses are deductible for income tax purposes. <\/p>\n

Case of Estate of Lillian Baral<\/strong><\/p>\n

Lillian Baral was diagnosed with dementia \u00a0about seven years ago. She was hospitalized later that year, and her medical records showed that she had not been compliant in taking her prescription medicines. It became necessary to evaluate if it was safe for her to live alone. \u00a0<\/p>\n

\u00a0In 2006, an evaluation conducted by her primary physician revealed that her ability to communicate was impaired, that she suffered from memory deficit, was at risk of falling, and needed assistance with daily activities. The physician determined that she required assistance and supervision 24 hours a day for medical reasons as well as for reasons of personal safety. David Baral, Lillian\u2019s brother, obtained a power-of-attorney and handled her personal and financial affairs. Following the physician\u2019s determination, Mr. Baral hired two caregivers and paid them a total of $49,580.<\/p>\n

\u00a0Lilian Baral died on Aug. 28, 2008, and David Baral became the administrator of her estate. David deducted the medical expense of the caregivers in 2007 to decrease Lillian\u2019s tax liability.<\/strong><\/p>\n

IRS Definition: Medical Expenses\u00a0\u00a0\u00a0\u00a0\u00a0 <\/strong><\/p>\n

The Tax Code (Sec. 213) allows expenses for medical care, not compensated for by insurance or otherwise, to be claimed as an itemized deduction to the extent they exceed 7.5% of adjusted gross income (AGI). Medical care is defined as, \u201camounts paid for the diagnosis, cure, mitigation, treatment or prevention of a disease, and the amounts paid for qualified long-term care services.\u201d The Code defines \u201cqualified-long term services\u201d as services that are (A) required by a \u201cchronically ill\u201d individual and (B) are provided under a plan of care prescribed by a licensed health care practitioner. The issue that the Tax Court had ruled on in the Lillian Baral case was whether the payments to the caregivers fell under either the category of medical care expenses or qualified long-term services expenses. \u00a0\u00a0<\/p>\n

Verdict: Deduction Allowed<\/strong><\/p>\n

Although the caregivers weren\u2019t licensed healthcare providers and the payments to them were not for the diagnosis, cure, treatment or prevention of the decedent\u2019s disease, the payments nonetheless satisfied the two requirements to be considered qualified long-term care expenses. Ms. Baral\u2019s primary physician certified that she required the supervision to protect her health and safety due to her severe cognitive impairment. Accordingly, the Tax Court determined that Ms. Baral met the first requirement, as she was considered chronically ill. The services provided by the caregivers were pursuant to a plan of care prescribed by her physician, a licensed health care practitioner. This satisfied the second requirement. The fact that the caregivers themselves were not licensed was not deemed relevant.<\/p>\n","protected":false},"excerpt":{"rendered":"

Caregiver expenses for dementia patient were tax deductable. Caregivers were not licensed and payments were not for cure or treatment of disease, yet payments satisfied two requirements to be considered qualified long-term services.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,11,14,22],"tags":[133,199],"class_list":{"0":"post-149","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-estate-trusts-guardianships","7":"category-income-taxes","8":"category-medical-practices","9":"category-tax-tips-for-individuals","10":"tag-medical-expense-deduction","11":"tag-taxes-for-elderly","12":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/149","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=149"}],"version-history":[{"count":0,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/149\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}