Discussion:Medical expense paid by other

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Discussion Forum Index --> Basic Tax Questions --> Medical expense paid by other


Discussion Forum Index --> Tax Questions --> Medical expense paid by other

Sandiye (talk|edits) said:

28 October 2009
Situation: Mom wrote check directly to the medical provider for a young couple's medical expense. They are repaying her monthly as both parties considered it a loan. Tho' it seems only fair that the repayments be deductible, I think the IRS would not agree. However, I cannot seem to find this situation mentioned explicitly in the IRS pubs.

Are they deductible? References...?

Thanks

KathiJud (talk|edits) said:

28 October 2009
Making monthly payments to a medical provider is deductible. Making monthly payments on a loan used to pay those expenses is not deductible. If a valid loan relationship can be established with Mom, the deduction belongs in the year the loan proceeds were used to pay the expense.

Sandiye (talk|edits) said:

29 October 2009
Thanks,

It may have been a valid loan relationship...problem is that Mom made her check payable to the medical center...so no deduction, if I understand you correctly. Is this explicitly stated somewhere in the code? Original return was by another preparer. Client wants to see where IRS says they cannot deduct this...it was a considerable amount and will make a big difference.

R2 (talk|edits) said:

29 October 2009
Medical expenses paid with borrowed funds are deductible by the borrower in the year of payment. See Rev Rul 78-39. Also, see William J. Granan, 55 T.C. 753 (1971).

Sandiye (talk|edits) said:

29 October 2009
I do understand it is deductible if taxpayer first borrows the money and then uses that money to pay the provider. That's always been clear to me.

What I am not sure of: Is it still deductible if the third party (mom) paid the provider directly and then the taxpayer pays the third party over a period of years.

And, if deductible, would that be in the year in which the taxpayer pays for it...which, in this situation, is not when mom paid the bill...because mom paid it, not the taxpayer. (This is why I'm not sure it is deductible at all.)

KathiJud (talk|edits) said:

29 October 2009
R2 and I have given you the answer. Medical expense deductions must be tied to when the medical provider is paid. Repayment of debt to pay those expenses does not have the character of a medical expense.

R2 (talk|edits) said:

30 October 2009
Sandi, this is deductible by the children in the year paid by Mom, not in the year repaid to Mom. Read the Rev Ruling and the TC case.

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