Tax Tips for Parents of Children with Cancer
by Irving B. Ross, CPA
The following information is printed with permission from The Candlelighters Childhood Cancer Foundation. It was originally printed in their Winter/Spring 1998 newsletter.

If you are caring for a childhood cancer patient, or survivor, there may be allowable medical expenses that are being overlooked when you file your income tax return. The answers to the following questions are presented in the hope they will help you reduce your taxes to the legal minimum required.

1. Whose medical expenses can I include?
In addition to your own, you can include medical expenses of your spouse, provided you were married either at the time your spouse received the medical services or at the time you paid the medical expense. You can also include medical expenses you paid for your dependents.

2. When is someone considered my dependent?
A person generally qualifies as your dependent if they lived with you for the entire year or they were related to you. Dependents could include a niece or nephew, an adopted child, or your parents. In all cases, you must provide over half of that person's support for the calendar year. (See question 22 for what constitutes "support.")

3. How do I take the deduction on my tax return?
You indicate the total of your medical insurance premiums and medical expenses, less any medical insurance reimbursement, on Schedule A of your Form 1040. The amount in excess of 7.5% of your adjusted gross income is deductible. If you file your taxes using either Form 1040A or Form 1040EZ, instead of Form 1040, you cannot claim a deduction for medical expenses.

4. Last year we did not deduct any medical expenses because they were less than 7.5% of our adjusted gross income. This year we will be deducting our medical expenses. We also received reimbursement of some of last year's expenses. Do we have to reduce our medical expenses by this reimbursement?
No, you do not reduce your current-year medical expenses for reimbursements you received in the current year if you did not deduct the medical expenses in the year you paid them.

5. What medical expenses can I include?
Medical expenses include amounts paid for the diagnosis, treatment, mitigation, cure, or prevention of disease, and for treatment of any part or function of the body. The expenses must be primarily to alleviate or prevent physical or mental defect or illness. (See a listing of specific items at the end of this article.) Expenses for solely cosmetic reasons generally are not expenses for medical care.

6. My child suffers from a learning disability as a result of his cancer. Can we include the cost of sending him to a special school as a medical expense?
Yes, you can include tuition and other fees you pay to a special school. If you hire a tutor for your child, you can include these fees as well. In both instances, however, the expenses must result from your doctor's recommendation.

7. Can I deduct costs associated with mental health care for my child?
Yes, if you're asking about psychiatrists and psychologists. The fees of a social or occupational therapist would also be included, as long as they can be shown to be related to a mental defect or illness of your child.

8. Can I deduct the cost of a hotel when I take my child to an out-of-town medical care facility?
Yes, provided your trip was primarily for and essential to the medical care of your child. The amount, however, cannot exceed $50 per night for each person. Therefore, $100 per night can be included as a medical expense for you and your child.

9. If my spouse and/or children accompany me when I take my child to an out-ot-town medical care facility, can I deduct an additional $50 per night as lodging cost for them as well?
No. Their travel would not be considered essential and therefore their lodging cost would not be deductible.

10. Can I deduct the cost of meals for my child and me when we travel to an out-of-town medical care facility?
No. Meals are not deductible for either of you. However, meals provided to your child by a hospital or similar institution as a necessary part of overall medical care are deductible.

11. Can I deduct the transportation expenses of taking my child to a medical care facility?
Yes. Medically related transportation expenses, both local and out-of-town, are deductible. These would include those of a parent who must go with a child who needs medical care. Transportation expenses include bus, taxi, train, or plane fares, ambulance service, and your own car expenses.

12. How do I go about deducting my medically related automobile expenses?
While you can keep a record of your out-of-pocket expenses actually incurred, such as gas and oil, most people use the standard mileage rate allowance [check on the current standard rate]. . . .

13. Can I also include a portion of the expenses of maintaining and repairing my car?
No, the only deductible automobile expenses are those directly related to your specific medical travel.

14. What about the cost of parking fees and tolls?
Yes. Regardless of how you determine your allowable, medically related automobile expenses, all parking expenses and tolls can be included.

15. Can I deduct the cost of having someone stay with my other children when I take my ill child to a medical care facility or doctor?
No. Childcare for healthy children, including nursing care for a baby, is not an allowable medical expense. You may, however, be able to claim a childcare credit. Obtain IRS Form 2441 and the related instructions for more information.

16. My husband and I both work. As a result of our child's cancer, we plan to hire someone to care for her in our home. Can we include this cost as a medical expense?
Yes, you can include as medical expenses wages and other amounts you pay to someone for services such as giving medications, changing dressings, bathing, and grooming. They need not be performed by a nurse as long as they are services generally performed by nurses. If you hire someone who also performs personal and household services, these amounts cannot be included among your medical expenses unless your child's condition qualifies as requiring long-term care services. (IRS Publication 502 provides more information regarding "qualified long-term care services.")

17. Can I deduct expenses for modifications we made to our house to accommodate a wheelchair?
Yes. Any capital expenditures for equipment as well as home improvements necessitated by medical care are included. Request Publication 502 from the IRS for more information on this type of medical deduction.

18. My child's medical treatment has caused him to gain weight. Can I deduct as a medical expense the cost of buying new clothes?
No. Normal-type clothing purchased for a sick child is not deductible. However, items prescribed by a doctor, such as eyeglasses, hearing aids, special shoes, artificial teeth, crutches, prosthetics, etc., are deductible.

19. Can I deduct the cost of special clothing required as a result of my child's medical condition?
While this is not specifically addressed by the Internal Revenue Code, an argument can be made that the cost in excess of that normally charged for clothing can be included as a medical expense. Thus, the additional cost associated with having to buy clothing or shoes with velcro closures, for example, could be included if you wanted to take an aggressive position.

20. Can I deduct the cost of nutritional supplements I give my child?
While my official answer is no, if you wanted to take an aggressive position and could show that supplements cost more than regular food, you might include just the additional cost.

21. Can I deduct the cost of purchasing a wig for my child?
Yes. There are specific revenue rulings that allow the cost of a wig to be included as a deductible medical expense. The determining factor, which would be true for other purchases as well, is that the purchase is made to alleviate one's mental discomfort resulting from a disease.

22. Can I deduct the medical expenses I pay for my child even though he received gross income of $5,000 this past year?
Yes, as long as you provided over half of your child's total support. Your child doesn't even have to live with you. Support is determined by comparing the amount you contributed to the entire support your child received from all sources. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Your child's own income, both earned and unearned, is not considered support unless it is actually spent on the above intems.

23. My wife and I are divorced. She has custody of our child. Can I deduct the medical expenses I've paid for our child?
Yes. Either parent can include the medical expenses they pay for their child, even if an exemption for the child is claimed by the other parent.

24. My parents and my ex-husband's parents are helping me support my child. None of us provides over half of her support. We signed a multiple-support agreement whereby I'm considered to provide more than half the support. Can we each deduct the medical expenses we paid separately on behalf of my child?
No. Medical expenses paid by others who join you in a multiple-support agreement cannot be included among their medical expensees. You, however, can include the entire unreimbursed amount of medical expenses you paid for your child.

General Notes

You can include the following as a medical expense: doctor and dentist services' fees; prescription medicines; hospital services' fees; nursing services; eyeglasses and contact lenses; special shoes; artificial limbs; oxygen equipment and oxygen; medical and hospital insurance premiums; psychiatric care; lab work fees; therapy services; hearing aids; expenses of an organ donor; artificial teeth; and treatment at a drug or alcohol center. You cannot include as a medical expense: toothpaste, toiletries and cosmetics; life insurance premiums; maternity clothes; surgery for purely cosmetic reasons; illegal operations or other treatments; nursing care for a healthy baby; medical insurance included in a car insurance policy; medicine you buy without a prescription; funeral, burial, or cremation expenses; and flu shots or other vaccinations.

You cannot include the following as a medical expense even if advised by your doctor: health club fees; swimming or dancing lessons; weight loss programs; household help; smoking cessation programs; or a trip for general health improvement.

Editor's note: For the latest tax information you can go to the Internal Revenue Service web site, http://www.irs.gov

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