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Family Chats – Medical Expenses Can Be Claimed for Disabled Adult

Family Chats – Medical Expenses Can Be Claimed for Disabled Adult
Family Chats – Medical Expenses Can Be Claimed for Disabled Adult
To everything there is a season. . .and, unfortunately within a circle of life, illness may arise. This event may in fact require an inter-advisory team of financial professionals to help your loved one transition from capacity to incapacity.
Powers of Attorney, health care directives, and wills should be put in place, if there is time. The tax system can help, too. But often, guidance will be required on what documentation needs to be kept.
Did you know, for example, that caregivers can claim the medical expenses of adults they are supporting, if those incapacitated dependants do not need the amounts to reduce their taxes payable?    
The medical expenses in this case are not based on family net income or the net income of the individual who is claiming the expenses. Rather, it is based on the net income of the disabled person, and that generally means a more significant tax reduction will result on your return.
Here’s an example: Pierre and Yvette care for and support Pierre’s mother, Sophia who lives with them. Sophia’s net income is only $5,000 for 2013. Her unreimbursed medical expenses total $9,000. Pierre can claim these medical expenses, reduced by 3% of Sophia’s net income to a maximum limitation of $2,152. This is calculated as follows:  $9,000 – ($5,000 x 3%) to equal a claim of  $8,850.
It’s Your Money.  Your Life.  Be sure to involve a legal advisor for the completion of the will, the Power of Attorney, and a health care directive. A financial advisor can assist with the planning of investment withdrawals and insurance. A tax specialist is instrumental in helping with complex and often-missed tax provisions–especially in a year of change–and in ensuring that investment withdrawals don’t create financial hardship down the road. Those tax savings can help fund professional fees and set a family up financially for the honor and responsibility of giving care.

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