Residential Treatment Centers: timing of payment

[mgmike]

I understand that residential treatment centers for dependents are valid medical expenses. I have a question about the date I paid for the services. My dependent entered a facility on 12/29/22 and was at the facility for 55 days. I was required to pay the entire fee on 12/29/22. Can I deduct the entire fee for 2022 even though the bulk of the services occurred in 2023? If I can only deduct the amount prorated for the 3 days in 2022, will I be able to deduct the other 52 days in 2023 even though it was paid in 2022? PUB 502, Under Dependents: "You can include medical expenses you paid for your dependent. For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses."

[PattiF · Accepted solution]

Yes, you can deduct the entire fee for the residential treatment center on your 2022 tax return. Most individuals use the cash basis of accounting for their taxes which counts payment at the time it was made. Since you paid the expense in 2022, you can add this to medical expenses for the tax year 2022. 

[mgmike]

Thank you. One more question. Under "What Expenses Can you Include this Year?", Pub 502 states "You can include only the medical and dental expenses you paid this year, but generally not payments for medical or dental care you will receive in a future year." Since 52 of the days were in 2023, can I still deduct the entire amount I paid in 2022?

[PattiF]

Yes, you can deduct the payment for the entire amount that was paid in 2022 as long as treatment was started in 2022.