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elllie
New Member

Can medical expenses paid by someone else for me be deducted on my taxes if I pay the person back?

I had a liver transplant and my mother paid over $85,000 on my behalf. I have to pay this back to her. Can I deduct any of this?

2 Replies
bwa
Alumni
Alumni

Can medical expenses paid by someone else for me be deducted on my taxes if I pay the person back?

If your mother paid the expenses and had no legal obligation to do so, they can be considered a gift to you, which will allow you to deduct the expenses in the year paid.

In the Judith Lang case, ( http://www.ustaxcourt.gov/inophistoric/la5ng.tcm.wpd.pdf ) Ms. Lang's mother paid her medical expenses and real estate taxes. Ms. Lang was not a minor. The Tax Court ruled that in effect the amount was a gift to the daughter, and deductible by the daughter as if she had paid it herself.

A key point in the case was “petitioner [Judith Lang] was not a minor, and Mrs. Field [Judith Lang’s mother] was not legally obligated to pay petitioner’s expenses.”  If Mrs. Field was obligated to pay the expenses, then her daughter may not have been able to deduct them, as they wouldn’t have been a gift. This would, for example, deny a deduction to a custodial parent for child support if it is legally required to be paid due to a divorce decree by the other parent.



general
New Member

Can medical expenses paid by someone else for me be deducted on my taxes if I pay the person back?

This answer is both incomplete and incorrect. While you cannot deduct what you are paying back to your mother, you CAN deduct from your taxes a portion of the $85K in medical expense your mother paid on your behalf (so long as she paid the expense directly to the hospital or billing entity). The portion of the $85K that is more than 10% of your Adjusted gross income is deductible.

So for example, if she paid the $85K bill(s) for you in 2015, and you had $100K in income, you could have itemized that medical expense and deducted $75K it from your 2015 taxes (plus the deduction would have carried over to future years if you didn't have $75K in taxes to pay in 2015).

If you paid your mother back the $85K in 2016, you cannot claim it as a deduction because you have already claimed it as an expense in 2015.

NOTE: If you have not claimed a portion of the $85K as a deduction in the year it was paid, you could file an amended tax return for the year the $85K medical expense was incurred.

Please consult with an accountant to confirm the info above and exact numbers.
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