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Tax Court Allows Deduction for Payment to Long-Term Caregivers - Emil Estafanous, CPA : Emil Estafanous, CPA

Tax Court Allows Deduction for Payment to Long-Term Caregivers

The Tax Court hold that payments done to an aged woman’s caregivers for personal caring that she compulsory due to her discontinued ability competent as long-term caring services and were therefore deductible underneath Sec. 213(d)(1)(C) (Estate of Baral, 137 TC No. 1 (2011)).

Lillian Baral was diagnosed by her medicine as pang from dementia, and a medicine dynamic that she compulsory 24-hour assistance and organisation for medical reasons. Her hermit (who rubbed Baral’s financial affairs underneath a energy of attorney) hired dual people to yield that caring and paid them $49,580 for their services in 2007. He also reimbursed them $5,566 for reserve they purchased.

Baral did not record an income taxation lapse for 2007, so a IRS prepared a surrogate lapse for her, underneath a reserve of Sec. 6020(b). The IRS dynamic that she had income of $94,229 for a year, and, after her personal grant and customary deduction, it dynamic she had an income taxation scarcity of $17,681 for a year. Baral died in 2008, and her estate sued to have a amounts paid for her long-term caring and supplies, as good as $760 paid to her physician, authorised as medical responsibility deductions for 2007.

Amounts paid for competent long-term caring services are deductible as medical losses underneath Sec. 213(d)(1). Qualified long-term caring services embody personal caring services compulsory by a chronically ill particular and supposing pursuant to a devise of caring prescribed by a protected medicine (Sec. 7702B(c)(1)).

The Tax Court hold that Baral competent as a chronically ill particular underneath Sec. 7702B(c)(2) since she compulsory estimable organisation to strengthen her from threats to her health and reserve due to her serious cognitive impairment. The justice also hold that a services supposing by a caregivers were compulsory upkeep and personal caring services that she compulsory since of her discontinued ability and that they were supposing pursuant to a caring devise prescribed by her physician. Therefore, they were competent long-term caring services.

The justice hold that a payments to a caregivers for their services and a remuneration to a medicine both competent as deductible medical losses (subject to a 7.5% of AGI threshold).

The payments for reserve did not validate as deductible medical expenses, a justice held, since a estate did not yield profits to a justice or differently justify that they were for medical care.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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