Medical expense deduction, MFS

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pierremonfrere
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Joined: Tue Jun 23, 2015 7:34 pm

Medical expense deduction, MFS

Post by pierremonfrere » Tue Mar 13, 2018 9:15 pm

According to Pub 502
“Separate returns. If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise.”
“Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI”
For 2017, we had about $20k of unreimbursed medical expenses (all spent on one person). We file separately and my wife made a little over 2x my salary. We only have a joint checking account. If we split the medical expense between us, she won’t meet the 10% threshold, but I’ll still be a little above it. I’d rather give it all to one person to maximize the deduction.

Is it required that we split the medical expense or is it more of a suggestion? Since it says unless you can show otherwise, I feel like there is a little wiggle room. What would we need to do to show otherwise?

JBTX
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Re: Medical expense deduction, MFS

Post by JBTX » Wed Mar 14, 2018 12:44 am

The medical deduction was changed to 7.5% of agi for 2017/2018.

https://www.google.com/amp/s/www.cnbc.c ... years.html

I don’t think your linked publication has been updated for the recent tax changes.

jebmke
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Re: Medical expense deduction, MFS

Post by jebmke » Wed Mar 14, 2018 7:36 am

pierremonfrere wrote:
Tue Mar 13, 2018 9:15 pm
Is it required that we split the medical expense or is it more of a suggestion? Since it says unless you can show otherwise, I feel like there is a little wiggle room. What would we need to do to show otherwise?
Presumably you have receipts that indicate who the patient is for various items. A family insurance policy would need to be split evenly I think but most expenses should be specific to individuals.
When you discover that you are riding a dead horse, the best strategy is to dismount.

pierremonfrere
Posts: 146
Joined: Tue Jun 23, 2015 7:34 pm

Re: Medical expense deduction, MFS

Post by pierremonfrere » Wed Mar 14, 2018 7:51 am

JBTX wrote:
Wed Mar 14, 2018 12:44 am
The medical deduction was changed to 7.5% of agi for 2017/2018.

https://www.google.com/amp/s/www.cnbc.c ... years.html

I don’t think your linked publication has been updated for the recent tax changes.
Even better. Thanks for the update.

pierremonfrere
Posts: 146
Joined: Tue Jun 23, 2015 7:34 pm

Re: Medical expense deduction, MFS

Post by pierremonfrere » Wed Mar 14, 2018 8:00 am

jebmke wrote:
Wed Mar 14, 2018 7:36 am
pierremonfrere wrote:
Tue Mar 13, 2018 9:15 pm
Is it required that we split the medical expense or is it more of a suggestion? Since it says unless you can show otherwise, I feel like there is a little wiggle room. What would we need to do to show otherwise?
Presumably you have receipts that indicate who the patient is for various items. A family insurance policy would need to be split evenly I think but most expenses should be specific to individuals.
Most of the money was from one transaction. And yes,we would be able to show who the money was spent on.

So, if all the money is spent on one person, they should be the one to deduct the entire expense, rather than divide it between the two of us?

jebmke
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Re: Medical expense deduction, MFS

Post by jebmke » Wed Mar 14, 2018 8:02 am

pierremonfrere wrote:
Wed Mar 14, 2018 8:00 am
So, if all the money is spent on one person, they should be the one to deduct the entire expense, rather than divide it between the two of us?
That would be my interpretation of that citation.

Remember though that if one of you itemizes, the other cannot take the standard deduction.

It is rare that filing MFS is to the taxpayer's advantage. I've done hundreds of returns over the last 10 years and only come across three cases.
When you discover that you are riding a dead horse, the best strategy is to dismount.

pierremonfrere
Posts: 146
Joined: Tue Jun 23, 2015 7:34 pm

Re: Medical expense deduction, MFS

Post by pierremonfrere » Wed Mar 14, 2018 8:31 am

jebmke wrote:
Wed Mar 14, 2018 8:02 am
pierremonfrere wrote:
Wed Mar 14, 2018 8:00 am
So, if all the money is spent on one person, they should be the one to deduct the entire expense, rather than divide it between the two of us?
That would be my interpretation of that citation.

Remember though that if one of you itemizes, the other cannot take the standard deduction.

It is rare that filing MFS is to the taxpayer's advantage. I've done hundreds of returns over the last 10 years and only come across three cases.
Right. Our situation is complicated by student loans and uncertainty about future income. I'm doing some research now, and perhaps we may be able to file jointly.

oldfatguy
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Re: Medical expense deduction, MFS

Post by oldfatguy » Wed Mar 14, 2018 8:38 am

How were the medical bills paid?

If paid from your joint account, how do each of you contribute to that account? Do you put in the same amount, or does one of you contribute more than the other?

pierremonfrere
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Re: Medical expense deduction, MFS

Post by pierremonfrere » Wed Mar 14, 2018 2:49 pm

oldfatguy wrote:
Wed Mar 14, 2018 8:38 am
How were the medical bills paid?

If paid from your joint account, how do each of you contribute to that account? Do you put in the same amount, or does one of you contribute more than the other?
Paid with a credit card, which is paid off from the joint account. Aside from our retirement accounts, we are a one pot family.

oldfatguy
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Re: Medical expense deduction, MFS

Post by oldfatguy » Wed Mar 14, 2018 3:02 pm

pierremonfrere wrote:
Wed Mar 14, 2018 2:49 pm
oldfatguy wrote:
Wed Mar 14, 2018 8:38 am
How were the medical bills paid?

If paid from your joint account, how do each of you contribute to that account? Do you put in the same amount, or does one of you contribute more than the other?
Paid with a credit card, which is paid off from the joint account. Aside from our retirement accounts, we are a one pot family.
This part of the publication you cited seems pretty clear: "Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise.”

So "unless you can show otherwise" seems to indicate you would have to show that you do not equal interest in the account, or that your spouse made an extra deposit to it to cover the medical expenses.

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HueyLD
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Re: Medical expense deduction, MFS

Post by HueyLD » Wed Mar 14, 2018 5:14 pm

The IRS describes MFS medical expense division for non-community states and community states as follows:
Separate returns.

If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise.

Community property states.

If you and your spouse live in a community property state and file separate returns or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Generally, each of you should include half the expenses. If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. If you live in a community property state and aren't filing a joint return, see Pub. 555.
The IRS also advises that:

"If medical expenses are paid with funds deposited in a joint checking account in which you and your spouse have an equal interest, you can deduct on your separate return half of the total medical expenses, subject to certain limits, unless you can show that you alone paid the expenses."

https://www.irs.gov/publications/p504#e ... 1000175846

pierremonfrere
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Joined: Tue Jun 23, 2015 7:34 pm

Re: Medical expense deduction, MFS

Post by pierremonfrere » Wed Mar 14, 2018 10:41 pm

That makes it more clear. Thank you.

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