Q My son with autism turned 18 this summer and started receiving SSI in August. Does he file a tax return? Do you know what forms he would use? Does SS send out a w-2 of some kind? So far, we haven’t received anything.
A. If your son's only income is SSI, he would not file a tax return. SSI is not considered income for tax purposes. The Social Security Administration does send out tax notices, Form SSA-1099, to people who need to report this on their tax returns. Your son should not receive the SSA-1099, and you don't need to be concerned about filing a tax return. By the same token, recipients of SSI are not eligible for the 2008 tax stimulus payment, nor the 2009 credit for any unreceived stimulus payment.
Showing posts with label taxes. Show all posts
Showing posts with label taxes. Show all posts
Monday, February 2, 2009
Monday, January 26, 2009
CAPITAL EXPENDITURES
Q. My doctor has recommended that I have heart surgery in the next few months because of my heart condition. I am going to need to install an elevator in my home, so I will be able to get to my bedroom on the second floor. Is any of this expense tax deductible?
A. Yes. The general rule is that capital expenses for medical care can be deducted as a medical expense to the extent that the cost of the permanent improvement exceeds any increase in fair market value of your property. With the help of a real estate professional, determine the amount, if any, the value of your house will increase with the installation of the elevator. Subtract the cost of the increase in value from the cost of installing the elevator. Any amount greater than zero equals the amount of medical expense you can add to other medical expenses for you, your spouse, and your dependents to arrive at the "Medical and dental expenses" figure to enter on Line 1 of your Form 1040, Schedule A.
A. Yes. The general rule is that capital expenses for medical care can be deducted as a medical expense to the extent that the cost of the permanent improvement exceeds any increase in fair market value of your property. With the help of a real estate professional, determine the amount, if any, the value of your house will increase with the installation of the elevator. Subtract the cost of the increase in value from the cost of installing the elevator. Any amount greater than zero equals the amount of medical expense you can add to other medical expenses for you, your spouse, and your dependents to arrive at the "Medical and dental expenses" figure to enter on Line 1 of your Form 1040, Schedule A.
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Thursday, January 22, 2009
Standard Mileage Rates
The 2008 standard mileage rates were:
- Business miles driven - 50.5 cents per mile from January 1, 2008, through June 30, 2008, and 58.5 cents per mile for July 1, 2008 through December 31, 2008.
- Medical and Moving miles driven - 19 cents per mile from January 1, 2008, through June 30, 2008, and 27 cents per mile for July 1, 2008 through December 31, 2008.
- Miles driven in service of charitable organizations - 14 cents per mile for the whole year.
- Business miles driven - 55 cents per mile.
- Medical and Moving miles driven - 24 cents per mile.
- Miles driven in service of charitable organizations - 14 cents per mile.
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Medical Transportation Expenses
Q. Can you help us understand the rules regarding deducting mileage for medical care?
A. Transportation expenses for medical care (including dental care) for you, your spouse, and your dependent(s) should be included in the "Medical and Dental Expenses" part of Form 1040, Schedule A. Most people use the "standard mileage rate" allowed by the IRS, rather than the actual cost of gasoline, tires, oil, etc.
The standard mileage rate in 2008 for medical care was 19 cents per mile for the first six months of the year, and 27 cents per mile for the last six months of the year. If you kept a log or diary showing how many miles you drove your car for medical purposes, you would multiply the miles driven from January 1, 2008, through June 30, 2008, by 19 cents and the miles driven from July 1, 2008, through December 31, 2008, by 27 cents. You can also deduct parking fees, tolls, taxi fares, and bus fares.
For example, John drove 1,000 miles between January 1st and June 30th for medical care for himself, his wife, and their two minor children. During that same period, Mary, John's wife, also drove 1,000 miles for medical care for herself and the children. Since John and Mary file a joint return, they would multiply 2,000 by 19 cents to arrive at one part of their medical care expense ($380) for 2008. If John and Mary each drove 1,000 miles between July 1st and December 31st, they would multiply 2,000 by 27 cents to arrive at another part of their medical care expense ($540) for 2008.
To this $920, John and Mary would add their other medical expenses, such as out-of-pocket costs for health insurance, medicines, doctor and dental visits, eyeglasses, etc., to arrive at their total medical and dental expenses. Sadly, since the amount of the allowable deduction is the total of all medical and dental expenses (line 1 on Schedule A) minus 7.5% of their adjusted gross income (line 38 on their 1040), many taxpayers find that they spend a lot of money on medical and dental care but wind up with little or no allowable deduction.
For more information about medical and dental expenses, see IRS Publication 502.
A. Transportation expenses for medical care (including dental care) for you, your spouse, and your dependent(s) should be included in the "Medical and Dental Expenses" part of Form 1040, Schedule A. Most people use the "standard mileage rate" allowed by the IRS, rather than the actual cost of gasoline, tires, oil, etc.
The standard mileage rate in 2008 for medical care was 19 cents per mile for the first six months of the year, and 27 cents per mile for the last six months of the year. If you kept a log or diary showing how many miles you drove your car for medical purposes, you would multiply the miles driven from January 1, 2008, through June 30, 2008, by 19 cents and the miles driven from July 1, 2008, through December 31, 2008, by 27 cents. You can also deduct parking fees, tolls, taxi fares, and bus fares.
For example, John drove 1,000 miles between January 1st and June 30th for medical care for himself, his wife, and their two minor children. During that same period, Mary, John's wife, also drove 1,000 miles for medical care for herself and the children. Since John and Mary file a joint return, they would multiply 2,000 by 19 cents to arrive at one part of their medical care expense ($380) for 2008. If John and Mary each drove 1,000 miles between July 1st and December 31st, they would multiply 2,000 by 27 cents to arrive at another part of their medical care expense ($540) for 2008.
To this $920, John and Mary would add their other medical expenses, such as out-of-pocket costs for health insurance, medicines, doctor and dental visits, eyeglasses, etc., to arrive at their total medical and dental expenses. Sadly, since the amount of the allowable deduction is the total of all medical and dental expenses (line 1 on Schedule A) minus 7.5% of their adjusted gross income (line 38 on their 1040), many taxpayers find that they spend a lot of money on medical and dental care but wind up with little or no allowable deduction.
For more information about medical and dental expenses, see IRS Publication 502.
Can parents claim a teenager residing in a supported living facility as a dependent on their tax return?
Q. Our teenage son moved into a supported living facility this past February. He receives SSI and Medicaid benefits. Can we still claim him as a dependent on our 2008 income tax return?
A. Unfortunately, no. In this situation, as in almost every other situation other than one involving divorced parents, the rule is that the teenager must have lived in his parents' household for more than six months of the year to be considered a dependent. (Internal Revenue Code Section 152(c)(1)(B).)
A. Unfortunately, no. In this situation, as in almost every other situation other than one involving divorced parents, the rule is that the teenager must have lived in his parents' household for more than six months of the year to be considered a dependent. (Internal Revenue Code Section 152(c)(1)(B).)
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Monday, January 19, 2009
Can I deduct the cost of a special diet for my child?
Q. My son's physician has prescribed a special diet to treat my child's medical condition. Is that a deductible medical expense?
A. Yes, if the physician has actually written out a prescription (and not just given you a paper as a guide). As a rule of thumb, it would be deductible, if you can use the prescription to avoid sales tax on the items, if they would ordinarily be subject to sales tax.
Treasury Regulation section 1.213-1(e)(ii) states: "ii) Amounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments, are deemed to be for the purpose of affecting any structure or function of the body and are therefore paid for medical care. * * * Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. * * * However, an expenditure which is merely beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical care."
In my opinion, taxpayers will get different answers to the question posed from different auditors. However, in my opinion, special diets to ameliorate or "cure" a medical condition are "treatments affecting [a] portion of the body" and therefore meet the definition of "medical care." Further, since this care is for the alleviation or cure of "a physical or mental defect or illness," such expenditures are deductible as medical expenses under IRS Code Section 213.
The IRS, if it challenges the deduction, could argue that if the cost of substituting one type of flour for another to meet the strictures of a specific diet does not exceed the cost of the "typical" flour, there is no medical expense. For example, if the cost of oat flour is $4.00 per pound and the cost of wheat flour is also $4.00 per pound, the IRS would probably argue that the money spent for the oat flour is not a deductible medical expense. If, however, the cost of the oat flour is $10.00 per pound versus $4.00 per pound for the wheat flour, I can't see how IRS could argue that a $6.00 per pound deduction would be improper.
See Circular 230 Notice, below.
A. Yes, if the physician has actually written out a prescription (and not just given you a paper as a guide). As a rule of thumb, it would be deductible, if you can use the prescription to avoid sales tax on the items, if they would ordinarily be subject to sales tax.
Treasury Regulation section 1.213-1(e)(ii) states: "ii) Amounts paid for operations or treatments affecting any portion of the body, including obstetrical expenses and expenses of therapy or X-ray treatments, are deemed to be for the purpose of affecting any structure or function of the body and are therefore paid for medical care. * * * Deductions for expenditures for medical care allowable under section 213 will be confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness. * * * However, an expenditure which is merely beneficial to the general health of an individual, such as an expenditure for a vacation, is not an expenditure for medical care."
In my opinion, taxpayers will get different answers to the question posed from different auditors. However, in my opinion, special diets to ameliorate or "cure" a medical condition are "treatments affecting [a] portion of the body" and therefore meet the definition of "medical care." Further, since this care is for the alleviation or cure of "a physical or mental defect or illness," such expenditures are deductible as medical expenses under IRS Code Section 213.
The IRS, if it challenges the deduction, could argue that if the cost of substituting one type of flour for another to meet the strictures of a specific diet does not exceed the cost of the "typical" flour, there is no medical expense. For example, if the cost of oat flour is $4.00 per pound and the cost of wheat flour is also $4.00 per pound, the IRS would probably argue that the money spent for the oat flour is not a deductible medical expense. If, however, the cost of the oat flour is $10.00 per pound versus $4.00 per pound for the wheat flour, I can't see how IRS could argue that a $6.00 per pound deduction would be improper.
See Circular 230 Notice, below.
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Does "rent" paid by a family member constitute income to parents?
Q.: My son lives at home and receives SSI. He pays us a flat amount per month for rent and food. Does the money received from my son have to be reported as income on our tax return?
A. No. Payments by a family member for "rent" or other living expenses to another family member does not constitute income. It is more akin to reimbursement for expenses, and should not be reported on your tax return.
See Circular 230 Notice, below.
A. No. Payments by a family member for "rent" or other living expenses to another family member does not constitute income. It is more akin to reimbursement for expenses, and should not be reported on your tax return.
See Circular 230 Notice, below.
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