Deducting your housekeeper as medical expense?

[tiredturkey]

An acquaintance told me she deducts her housekeeper as a medical expense because her doctor told her to reduce the dust in her environment and avoid contact with aerosol chemicals because of her respiratory issues so she needs a clean house and can't clean it herself. Okay, maybe I get her $6,000 air filtration system as a deduction, but the weekly housekeeper? Please tell me this is bogus. I asked her how her tax man felt about it and she said she just gives him one number for all her medical expenses without breaking out copays, prescriptions, housekeeper, etc. or documenting the expenses.

My CPA requires a breakout AND receipts for all deductions because he doesn't want his kids and grandkids visiting him in a federal facility. And there's no way he would ever accept an undocumented cash payment to a laborer as a deduction, even if I was dumb enough to try it.

[mwcpa]

people will try to deduct everything if they could.....

your CPA may be a little excessive asking for "receipts," but he/she is not "wrong." i normally question my clients about what looks like unusual costs and i do ask for "break-down" of certain costs.... I only ask for the receipt for certain items (like for the HUD-1 for those claiming the first time home buyer credit, receipts for energy efficiency items that qualify for the credits (often the new stove and "refrigerator were mistakenly counted, etc). If I asked for every single receipt I would be bogged down for weeks.... I do have my clients represent that they have support for all deductions they claim (in writing) and perform due diligence as needed.

From IRS publication 502

"You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness."

I would venture to guess that cleaning one's home primary function is to not prevent or alleviate a physical or mental defect or illness.

but.....

"Qualified Long-Term Care Services
Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are:

Required by a chronically ill individual, and provided pursuant to a plan of care prescribed by a licensed health care practitioner.

Chronically ill individual. An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions.

He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.

He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.

Maintenance and personal care services. Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). "

Based on what you note, I am not sure if the above is the position by your acquaintance.

further....

"You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of your property. The difference is a medical expense. If the value of your property is not increased by the improvement, the entire cost is included as a medical expense."

[taxref]

"Please tell me this is bogus."

In the vast majority (although maybe not all, based on extreme medical circumstances) of cases, it would indeed be bogus.

I agree with MWCPA about the receipts. I do not ask for receipts for medical costs unless something really seems odd about the amounts presented.

[tiredturkey]

My CPA's brother and business partner who was my former tax preparer committed suicide several years ago, due in part to the pressure he received from clients to endorse and submit their fraudulent returns. My guy returns my receipts after he reviews them and crosschecks them against the Quicken reports I submit with them. I'm actually grateful because my understanding of a deductible expense might be different from his professional knowledge and he makes sure I have the right documentation. The brother prepared my taxes for many years and I was devastated by his death while totally understanding the pressures that clients can bring in a small town environment. It's pretty tough when your client is on the board of the private school your child attends and you have a choice between doing the return the client wants or having illicit drugs found in your child's locker. And that's just one of the reasons we will never live in a small town again. And the reason I do business with a firm two hours drive away from my home. If we don't honor, respect and patronize the ethical among us, we won't have any.

[mwcpa]

plum... sad story....
I guess I should be grateful that I do not have to endure those pressures as I practice predominately in NYC (we just have different pressures here)....

I am sure though you are paying a "premium" for that extra level of service though, I know I charge a "higher" rate when a shoe box shows up.....

[tiredturkey]

No shoe boxes-just well organized receipts in envelopes stapled to a Quicken report on the category they support like medical, charitable, interest income. If he wants to see a receipt from Salvation Army for every deduction I list I don't have a problem with it.

He does have clients who literally bring in shopping bags of disorganized paper and they are charged accordingly.

He never charges me for a phone consult during the year when I need to explore the tax consequences of an investment option or want an update on recent tax legislation.