INSIDE THE HEALTH-CARE SYSTEM – MEDICAL DEDUCTIONS—WHAT THE IRS DOESN’T WANT YOU TO KNOW (PART 1)
When you pay more than 50% of the support for an individual, tax benefits can result… • When the individual’s income doesn’t exceed $3,200 in 2005 or $3,300 in 2006 (excluding tax-exempt income, such as from municipal bonds and the tax-free portion of Social Security),
you may be able to claim him/her as a dependent to obtain a tax exemption of $3,200 in 2005 and $3,300 in 2006.
note: New rules apply to a qualifying child. Income may not matter and support only becomes critical if the child pays more than half.
• Even if the individual has income exceeding the limit, you may be able to deduct medical expenses you pay on his behalf if the individual is a relative. (Ë “relative” is a parent, grandparent, sibling, child, grandchild, aunt, uncle, niece, nephew or in-law.)
*90/47/1*
