Two Tax Court Decisions On When Long-Term Caregiving Expenses Are Deductible

The U.S. Tax Court recently ruled on two cases that address when long-term care services are deductible. In Estate of Lillian Baral (U.S. Tax Ct., No. 3618-10, July 5, 2011), the court held that medical expenses for the payments to caregivers were deductible because the patient was “chronically ill” and her doctor believed the caregivers were necessary due to the patient’s illness.

In Estate of Olivo v. Commissioner (U.S. Tax Ct., No. 15428-07, July 11, 2011), the court held that caregiving services provided to a patient by her son were not deductible from the patient’s estate. The court found that without a written agreement to the contrary, the presumption remained that services provided to a family member living in the same household as the caregiver were given without any expectation of repayment.

See Two Tax Court Decisions Clarify When Long-Term Care Expenses Are Deductible, Elder Law Answers, Jul. 15, 2011.

Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.