Parent's Medical Expenses

[robriegel18]

Thanks.  This is very helpful.

My Dad has bad dementia. He can not perform any of the daily activities of life. The private aides that came to his apartment for most of 2021 helped him bath, dress, eat, go to the bathroom, get cleaned, etc. so their expense should all be counted as a medical expense, right?

In November, my Dad was moved to the memory care unit in the assisted living building of their community. He had to be moved to the memory care unit because he could no longer stay in the apartment—he needed more care and assistance and attention because of his worsening chronic dementia condition. The unit charges him $385/day which includes his room & board there, plus all the care from the doctors, nurses, and aides on the floor that treat my Dad. They do not provide a breakdown of the $385/day. The memory care doctors/nurses have a written care plan for my Dad which is followed snd updated as needed. I have not seen this written care plan myself, but it exists—it is required for every patient in this memory care unit in order for it to be “qualified” (maybe as a long-term care facility?) to get funding. So given this information, I would think my Dad meets all 3 tests for long term care expenses, right? If so, then all of the $385/day expense would count as a medical expense, right?  Be ask me any questions if I wasn't clear about my Dad’s situation. I appreciate your help. 

[Opus 17]

@robriegel18 

I obviously can’t vouch for the truth of your statements, but it does sound to me as though your father’s aides before he was placed in the memory care unit were performing nursing duties and would be fully deductible as medical expenses. And if the memory care unit requires a written plan, and your father requires assistance with two or more ADLs as stated, then the entire cost of the memory care unit would also be a deductible medical expense.  If your tax return was audited, you might be asked to furnish a copy of the care written care plan, so you might think about asking to see it now, or you might ensure that you would be allowed to see it if needed. You might need to be designated your parent‘s medical proxy in order to get access to their medical records under HIPPA.  (You could have your mother execute a durable power of attorney for you as well, but it is too late for your father to execute a POA unless he previously executed one when he was competent.)

[robriegel18]

Thanks again!  I do have POA (along with my brother) from my Dad that was executed several years ago, along with a Living Will that designates us both as medical proxies, along with my Mom. I will ask the dementia care unit now to make sure there is a care plan and make sure that I can see the care plan in the future if I need to do so. I will start working on that Support Worksheet to see if I did provide >50% support in 2021--one way trying to separate just my Dad's assets and expenses and a 2nd way keeping their assets and expenses combined. That seems to be key, as if I did not provide >50% support, then I can not deduct any of the medical expenses that I paid for my Dad in 2021.  

[robriegel18]

I'm working on Worksheet for Determining Support and I'm confused what goes on Line 2 as being "support" and what goes on Line 3? Is Line 2 all living expenses and Line 3 include things like an investment? Thanks.     

[Opus 17]

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@robriegel18 wrote:

I'm working on Worksheet for Determining Support and I'm confused what goes on Line 2 as being "support" and what goes on Line 3? Is Line 2 all living expenses and Line 3 include things like an investment? Thanks.     

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There is an equivalent worksheet in publication 501 that may be easier to use or has more instructions in the publication.

https://www.irs.gov/pub/irs-pdf/p501.pdf

Looking at the worksheet you are using, line 1 is funds available to your dad from all sources, line 2 is funds used (paid out) for his own support, and line 3 is funds used (paid out) for other purposes (not his own support).  That could include gifts to family members, money that was put into investments, gifts to charities or churches, or money used to support someone else.  Your father might have used all his income for his own support, but maybe not.  (Typically, social security will be paid directly to the care facility, but if he also had a pension or investments, it might have been spent by him -- or by someone else acting on his behalf -- for something else.) Line 2 plus line 3 should probably equal line 1.  

[robriegel18]

I'm still struggling to complete this Support Worksheet. In which lines do I include the support that I provided for my Dad's medical expenses? It seems that Line 2 and Lines 6-11 and Lines 13-19 and Line 21 are all related just to my Dad's expenses (which he paid).  Do I put the medical expenses that I paid for my Dad on Line 23? If Lines 1-21 are all related just to my Dad's funds and expenses he paid (before considering the expenses that I paid for), then the Line 22 question of course will be "Yes" because Line 19 equals Line 2 and Line 20 is 50% of Line 19, so Line 21 is of course more than Line 20. And if Line 22 is "Yes", then I don't meet the support test which makes no sense. Am I missing something? Do the medical expenses that I paid for go on Line 16? Thanks.

[Opus 17]

@robriegel18 

The worksheet is a bit odd because it serves two purposes, because it covers two different dependent situations with different definitions of support.  Most of the worksheet is used to calculate his support costs, whether your portion of the support is more or less than half is only determined at the very end. 

• Lines 1-5 calculate the funds your father used toward his own support.
• Lines 6-12 calculate the funds spent by the household where your father lived.  That would be the combined cost of your father and mother's lodging, food and so on.  You could calculate it as if your father shared a household with your mother until he moved into memory care (if it's a single room and they aren't in the same "household" any more.  You do that by completing lines 6-12 for the time they lived together, and another copy of lines 6-12 for the time he lived alone.
• Line 14-18 calculates your father's individual support costs.  For "support", if your father lived in a household with 2 people total, his support costs are 1/2 the household costs plus all of his personal support costs.  That's why household food is on line 7 and individual medical expenses are on line 16. 
• Then line 13 and 19 calculate you father's total support cost, being in this case, 1/2 his household expenses plus 100% of his individual expenses.

Your money never enters into it at this stage.

• Line 20 and 21 ask, did your father pay more than half his own expenses?  Are his funds (line 6) more than half his costs (line 19).  Assuming the answer is no, you move on to the last section.

Here, the form is negative rather than positive, for some reason.  Instead of asking for what you paid, the form is asking what everyone else paid, who might have contributed to his support (that includes your mother, other family members, church, welfare, or anything else).  Then logically, if know the total support costs, and you know what everyone else paid, whatever is left must be what you paid.

 There is a reason the form is written the way it is, but in your situation you will get the same result if you reverse the question and ask simply, how much did you pay?  And is the amount you paid more than half of his total support (line 19).  

[robriegel18]

Thank you so much for trying to explain this more clearly. I will give it another shot with your helpful guidance.  This is not an easy Worksheet to follow!  

[robriegel18]

Hello.  I spent a lot more time going through the Worksheet....and I'm still confused.  I worked through the Household expenses (Lines 6-11) when my Dad & Mom lived together (for Jan-Oct) and cut those in half for Line 13. I then looked at the Household expenses (Lines 6-11) when my Dad lived alone in dementia unit (Nov-Dec) and he had no Household expenses because all his expenses were "medical expenses"included in Line 16.  I then completed Lines 14-18 for my Dad's "personal" expenses which were essentially all medical expenses through the entire year (including the aides for Jan-Oct and the cost of the dementia unit for Nov-Dec). I did not include in any of these lines what I personally paid the aides and dementia unit myself. I think my problem is what I'm putting in Line 2. I am putting in Line 2 the portion of my Dad's Household expenses (Line 13) plus his personal expenses (Lines 14-18). So my Line 19 equals my Line 2. So, of course, my Line 21 (which equals my Line 2)  is more than Line 20 and I answer "Yes" and my Dad doesn't meet the criteria which makes no sense. So I believe that I'm thinking about Line 2 incorrectly.  What goes in Line 2? It obviously should not equal my Line 19, right? What does the amount of my Dad's funds on Line 1 (which includes his beginning-of-year assets plus his income during the year) "used for the person's support" mean?  I assumed it meant what he spend on his expenses (prorated Household expenses plus his personal expenses) , but my interpretation must be wrong. Thanks! 

[robriegel18]

Can anyone help me with my post? Thanks.

[robriegel18]

I have a question about the following Worksheet in Pub 501

https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Is my Dad a qualifying relative if I provided more than 50% support for his living expenses (including his medical expenses in dementia facility) in 2021 even though my Dad had sufficient assets to cover his living expenses. I provided a lot of his medical expenses as support so that he could maintain his assets because the assets provide investment income to help pay (along with his social security) for his living expenses. If he was to sell off his assets to pay for his medical expenses in the dementia unit, then he would soon be out of money, so instead, I helped pay for all his medical expenses and he paid for his other living expenses like food and rent. So I provided the funds to cover more than 50% of his living expenses in 2021, but when I complete the Worksheet above, it doesn't seem like I qualified as providing more than 50% of his living expenses because of his beginning of year assets. So my question is whether I can just compare what I paid for in terms of his living expenses relative to his total living expenses, or do his assets have to come into the discussion because, in theory, he could have paid for all his living expenses by selling off a lot of his assets. Thanks.  

[MarilynG1]

Yes, you can claim your father as your dependent if you calculated that you cover over 50% of his living expenses.  If he chooses to keep his money in investments, he is not spending it for his own support.

The key concept is "they didn't provide more than half of their own support for the year."

Click this link for more info on Claiming a Dependent. 

[Opus 17]

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@robriegel18 wrote:

I have a question about the following Worksheet in Pub 501

https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Is my Dad a qualifying relative if I provided more than 50% support for his living expenses (including his medical expenses in dementia facility) in 2021 even though my Dad had sufficient assets to cover his living expenses. I provided a lot of his medical expenses as support so that he could maintain his assets because the assets provide investment income to help pay (along with his social security) for his living expenses. If he was to sell off his assets to pay for his medical expenses in the dementia unit, then he would soon be out of money, so instead, I helped pay for all his medical expenses and he paid for his other living expenses like food and rent. So I provided the funds to cover more than 50% of his living expenses in 2021, but when I complete the Worksheet above, it doesn't seem like I qualified as providing more than 50% of his living expenses because of his beginning of year assets. So my question is whether I can just compare what I paid for in terms of his living expenses relative to his total living expenses, or do his assets have to come into the discussion because, in theory, he could have paid for all his living expenses by selling off a lot of his assets. Thanks.  

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You're making this way too complicated and dragging it out much too long.  The questions are very simple.

1. Did you pay more than half your father's support expenses?

2. Does your father have more than $4300 of taxable income?

If the answer is yes to #1 and yes to #2, then you can't claim him as a dependent, but you can deduct medical expenses you paid for.

You don't have to use any particular method to calculate if you paid "more than half" the expenses.  The IRS worksheet is one method, but you don't have to use the worksheet if you have another way to determine if you paid more than half his expenses.  

Review lines 1-5 carefully.  Line 1 wants all his money--all sources of income and all assets.  Line 2 wants the amount that he spent on his own living expenses, line 3 is money he spent on other things (not his own support) and line 4 is his total assets at the end of the year. 2+3+4+5 should equal line 1.  In other words, money he spent on himself plus money he spent on other things plus his savings equals all his money.  

But the only number needed later is line 2, what he spent on his own support.  Money or assets in savings, or money spent on other people, is not money he spent for his own support.  

Nowhere else in the support worksheet does it ask for line 1 (total funds) or line 4 (assets at the end of the year).  I don't understand why you think the worksheet is asking you to compare the support you provided against his assets.  That doesn't happen anywhere in the worksheet. 

[robriegel18]

The answers to both your questions are "Yes" and "Yes". But my Line 5 does not equal Line 1 because the appreciation of his beginning of year assets on Line 1 is included in Line 4 (end of year assets) but is not in Line 2 or Line 3. But the more important issue is that Line 2 equals Line 19. This means that Line 21 (which equals Line 2) is exactly 2x Line 20 (which is 1/2 of Line 19). This means that answer to Line 22 question is "Yes"--and my Dad can not be my qualifying relative. What am I doing wrong? 

[robriegel18]

I can't claim him as a Dependent because he had more than $4300 in income. But I think he is a Qualifying Relative. So it doesn't matter how much in assets he has to start the year? As long as I paid for over 50% of his 2021 living expenses, then can I include his medical expenses that I paid for in my tax return as my medical expenses in my itemized deductions? My paying for his medical expenses is not considered a Gift? Thanks.