Please help ASAP Cheryl is a successful attorney licensed in Connecticut and is
ID: 2597596 • Letter: P
Question
Please help ASAP Cheryl is a successful attorney licensed in Connecticut and is your new tax client. Her sister-in-law, Joy, is married and lives in the next town. Unfortunately, Joy was diagnosed this summer with bone cancer, called chondasarcoma, and has been in the ICU (Intensive Care Unit) at Memorial Sloan Kettering Cancer Center in New York City and has had 6 surgeries during the 5 weeks there in the ICU. Cheryl estimates that the medical bill for the hospital will be upwards of $500,000. Joy does not have good medical insurance nor good finances. Cheryl would like to pay $50,000 of Joy's medical expenses by the end of December. How can Cheryl account for this payment on her personal tax return for 2017? Please explain in detail (at least 3 substantive sentences.)
Explanation / Answer
1. As per IRS, a person can take deduction of medical expenses paid for self, spouse or dependents during the year. As per IRS, a dependent is a person who meets the following criterias:
a. The person is either a qualifying relative or a full-time member of your household. Sister-in law as per IRS is a qualfying relative for the purpose of this section.
b. He or she is a citizen or resident of the U.S. or a resident of Canada or Mexico. In the given case, Joy is a resident of U.S.
c. He or she did not file a joint income tax return with anyone else. In the given case, Joy is married and she must be filing joint return with her husband.
d. You provided over half of his or her support. In the given case, out of $500,000 only $50,000 is given by Cheryl and therefore she did not provide half support.
e. The person in question has less than $4,050 of gross income in 2017. In the given case, it is not known..
Sister-in law falls in the category of qualifying relative as per IRS. Therefore, in the given case since Joy is qualifying relative of Cheryl and also citizen of US. However, Cheryl did not provide over half of the support to Joy i.e $250,000 and moreover since Joy is married, she must be filing joint return with her husband. As a result all of the conditions mentioned are not fulfilled and therefore, in the given case, Joy will not be treated as dependent of Cheryl and Cheryl cannot claim deduction of $50,000 as medical expense in her personal income tax return.