Medical expense deductions

[biggap]

I am re-doing my parents' tax return for 2018, the year they died, as I realized they had enough medical expenses to make it worth deducting. 

Question: Do I deduct the expenses the year they accrued, or the year they were paid?

Situation: My mother was in care for the last 4 months of 2017, and then 8 months of 2018. The facility carried a balance for the first few months, waiting for Medicare to decide what to pay. In February of 2018, my father finally started paying the facility, and one of his early checks was clearly for the residual 2017 balance. I have a complete breakdown from the facility, so I am able to separate out her actual 2017 and 2018 expenses. If I deduct based on when the check was written - as one does with charitable contributions - then all of her expenses were paid in 2018. However, if I must deduct based on when the expenses accrued, then I may go back and file an amended return for 2017 as well, as my father clearly did not think of doing this.

My father also died in 2018, and was also in care for part of the year. In his case, one of the doctors didn't get paid until 2019, for services that occurred in 2018. Again, does that expense count as 2019 based on when it was paid, or does it roll back into the 2018 deduction?

[Opus 17]

Medical expenses are deducted when  actually paid to the provider, not when the procedure occurred.  And if the expense was paid with a credit card or other loan, you still use the date the provider was paid, and not the date the credit card or loan payments were made. 

[Anonymous]

from IRC code section 213 - medical, dental, etc expenses

(a)Allowance of deduction
There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse,

(c)Special rule for decedents
(1)Treatment of expenses paid after death
For purposes of subsection (a), expenses for the medical care of the taxpayer which are paid out of his estate during the 1-year period beginning with the day after the date of his death shall be treated as paid by the taxpayer at the time incurred.   (not the date paid)  

(2)LimitationParagraph (1) shall not apply if the amount paid is allowable under section 2053 as a deduction in computing the taxable estate of the decedent, but this paragraph shall not apply if (within the time and in the manner and form prescribed by the Secretary) there is filed—
(A)a statement that such amount has not been allowed as a deduction under section 2053, and
(B)a waiver of the right to have such amount allowed at any time as a deduction under section 2053.

in other words the choice is a deduction on the deceased tax return or on the deceased estate return. but if deducted o the 1040 those statements must be included. which would require paper filing. 

[biggap]

Hmm, that suggests that the $55 bill I paid after my father's death is too much trouble to worry about  🙂

However, the bulk of the question had to do with my mother's facility expenses that were paid long before her death. Can I take the clause: "expenses paid during the taxable year" as confirmation of Opus 17's answer?  

[Opus 17]

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@biggap wrote:

Hmm, that suggests that the $55 bill I paid after my father's death is too much trouble to worry about  🙂

However, the bulk of the question had to do with my mother's facility expenses that were paid long before her death. Can I take the clause: "expenses paid during the taxable year" as confirmation of Opus 17's answer?  

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Because your parents are basically "one taxpayer" when filing a joint return, and your father is allowed to file a joint return for 2018 since his wife died mid-year, the special rule does not apply.  You can deduct on your father's joint 2018 return all the expenses he actually paid for his wife's care in 2018 even if some expenses were paid after she died.

For your father's 2019 return, he will file as single (or possibly as a qualified widower if he provided care in his home for a qualifying dependent).  He can deduct on his 2019 return, all expenses actually paid before he died.  It is only expenses paid after he died, where you have to choose whether to deduct them on his personal return or his estate's return and include the explanation statement.  

[biggap]

Just to clarify:

My mother had expenses in 2017, which were not paid until 2018. She also had expenses in 2018. All of her expenses for the care facility were paid during 2018, even the expenses from 2017. 

Do I include those 2017 expenses in 2018, or do I go back and amend 2017? 

None of this has to do with expenses paid after death, only with the timing of payments across a year boundary.

[Opus 17 · Accepted solution]

Except for the special rule, expenses are deductible when paid to the provider, not when the service is performed.  You can include your mother's medical expenses incurred in 2017 as deductions on your father's 2018 tax return if the provider was actually paid in 2018. 

[biggap]

Thanks! I had to wade thru a lot of documents to untangle each year's expenses, then had to correlate with multiple payments and insurance reimbursements. Only then did I realize that all of our payouts happened in 2018. Being able to claim this during a single tax year (and NOT amending the previous year!) makes things a lot easier.