This Daily Tax Tip Spotify Podcast and/or WordPress Blog Post is in response to questions about the deductibility of certain medical expenses of a decedent.
Medical expenses paid before death by a decedent are included in calculating any deduction for medical and dental expenses on the decedent’s final income tax return.
Medical expenses not paid before death are liabilities of the estate and are shown on the Form 706 federal estate tax return.
However, the decedent’s survivor or personal representative can elect to treat those expenses as paid by the decedent at the time the medical services were provided. The expenses must be paid within the one-year period beginning with the day after the date of death. The survivor or personal representative must attach a statement to the decedent’s Form 1040 (or the decedent’s amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the decedent’s estate tax return. Where the survivor or personal representative makes this election, the portion of medical expenses that is not allowable as a deduction for income tax purposes due to the 10 percent of adjusted gross income floor is not deductible from the gross estate.
If a decedent’s return has been filed and the medical expenses were not included on the return, Form 1040X, Amended U.S. Individual Income Tax Return, can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has expired. Generally, an amended return must be filed within three years of the date the original return was filed, or within two years from the time the tax was paid, whichever date is later.
A taxpayer who paid medical expenses for his or her deceased spouse or dependent should include them as medical expenses on the taxpayer’s Form 1040 for the year paid, whether they are paid before or after the decedent’s death. The expenses can be included if the person was the taxpayer’s spouse or dependent either at the time the medical services were provided or at the time the taxpayer paid the expenses.
Finally, insurance reimbursements of previously deducted medical expenses due a decedent at the time of death and later received by the decedent’s estate are includible in the income tax return of the estate (Form 1041) for the year the reimbursements are received. The reimbursements are also includible in the decedent’s gross estate.
Please call me at your earliest convenience if you have additional questions regarding these medical expenses of a decedent deductions or need additional advice on which return to claim these expenses.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 07112021-1 320-760)