IRS Tax Deductions for handicapped child

Karin Price Mueller for the Star-Ledger in her column writes: Q. I have an adult handicapped child that I had to move to an assisted living facility because of my age. Because the cost of assisted living is not covered by her settlement or Social Security, I have to subsidize it. Can I claim this as a deduction on my income tax? - ML

Answer: Yes, you can — as long as your child is considered your dependent.

I that’s the case, you can include any medical expenses you pay for her, along with your own medical expenses, when determining your medical deduction on your tax return, said Gail Rosen, a Martinsville-based certified public accountant.  To determine if your child is your dependent, the IRS says you must pass the following tests, Rosen said:

a) You must provide more than 50 percent of the individual’s support costs

B) The individual must be related to you

C) The individual must not have gross income in excess of the exemption amount, which is $3,800 for 2012

d) The individual must not file a joint return for the year

e) The individual must be a resident of the united states, Canada or Mexico

Rosen said the costs of qualified long-term care services required by a chronically ill individual are included in the definition of deductible medical expenses.

But, if your child is in such an institution primarily for family or personal reasons, then only the portion of the cost that is attributed to medical or nursing care — excluding the meals and lodging — is deductible, said Patricia Daquila, a certified public accountant with Lassus Wherley in New Providence.

You said your child receives social security, so you need to be careful in determining if she’s actually your dependent, Daquila said. If Social Security pays more than half, you could have a problem.

"In determining whether (your child) pays for more than half of her support, you need to add up all of her expenses during the year and determine who pays for more than half of her expenses,” she said. “If you pay for more than half of her support and she is considered a ‘qualifying child,’ then she would be claimed as a dependent on your tax return and all of her medical expenses could be deducted.”

Daquila said you can deduct the cost of medical expenses paid for you, your spouse and your dependents on schedule a (Form 1040).

For the 2012 tax year, you must have medical expenses that exceed 7.5 percent of your adjusted gross income to take the deduction.