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damn_limey
New Member

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

 
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Accepted Solutions
TaxGuyBill
Level 9

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

If he is your dependent, no, you don't need to file a Gift Tax return.

If he is not your dependent and you pay the medical institution directly, no, you don't need to file a Gift Tax return.

If he is not your dependent and you pay your son, then he pays the medical institution, yes, you may need to file a Gift Tax return (if you or your son are married, you may be able to avoid that).  No Gift Tax will be owed unless you have given about $6,000,000 away during your lifetime.

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5 Replies
TaxGuyBill
Level 9

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

If he is your dependent, no, you don't need to file a Gift Tax return.

If he is not your dependent and you pay the medical institution directly, no, you don't need to file a Gift Tax return.

If he is not your dependent and you pay your son, then he pays the medical institution, yes, you may need to file a Gift Tax return (if you or your son are married, you may be able to avoid that).  No Gift Tax will be owed unless you have given about $6,000,000 away during your lifetime.

DoninGA
Level 15

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

You may be able to claim the medical expenses you paid for your son as an itemized deduction on your Form 1040 Schedule A .

See the instructions for Schedule A page 2 - https://www.irs.gov/pub/irs-pdf/i1040sca.pdf#page=2

Whose medical and dental expenses can you include?  

You can include medical and dental bills you paid in 2016 for anyone who was one of the following either when the services were provided or when you paid for them. 

  • Yourself and your spouse. 
  • All dependents you claim on your return. 
  • Your child whom you don't claim as a dependent because of the rules for children of divorced or separated parents.
  •  Any person you could have claimed as a dependent on your return except that person received $4,050 or more of gross income or filed a joint return. 
  • Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2016 return.
damn_limey
New Member

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

Hi, thanks for the response.   My son earns too much for me to deduct it, but that is not really my concern.   Since this is over the $14,000 gift limit,  will it be considered taxable income?  If I pay for $10,000, and then gift $10,000 to another person - and they pay for the remaining 10,000 - -  would that get around the $14,000 limit of gifts?
Hal_Al
Level 15

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

A gift is not taxable income to the recipient, no matter how much the gift is.
The only question is: does the giver have to file a gift tax return.  See  TaxGuyBill's answer
Hal_Al
Level 15

If I pay for my adult son's medical expenses of $20,000, is that considered a taxable gift?

If your son  cannot be your dependent because he had more than $4,000 of gross income, but otherwise would have qualified as your dependent (basically that you & other family members provided more than half his support), then you can include in your deductible medical expenses any qualifying medical expenses you paid on his/her behalf just as if he/she was your dependent. The $20,000 you provided would count as support provided by your for this rule (the medical dependent rule)
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