Married Son’s Insurance

Today TaxMama hears from Mike in New Jersey with this question. “Can I deduct my son’s health Insurance premium of $900 a month that his wife and he can no longer afford to pay, on my tax return?”

TaxMama answers Tax Questions

Dear Mike,

Yup, we’re definitely on hard times when a child has to turn to his dad to get his insurance paid for him. Sigh.

I really wish you could take the deduction. For you to be able to deduct this really generous payment, you’d need to be able to claim your son as a dependant.

Unless $900 per month is more than half the cost to support your son, AND your son earns less $3500 (perhaps $3600 for 2009) for the year – nope. The payment is simply a gift to him. If he does qualify as a dependent, then he might have to file his tax return separately from his wife.

But be careful, you’re on the verge of having to pay gift taxes! Wouldn’t that add insult to injury – not getting the deductions AND having to pay gift taxes.

The gift tax limit comes after you have made gifts of over $13,000 per person year. You can avoid falling into this trap by writing the checks directly to the health insurance company. That way,
it won’t be included as part of your annual gift tax limit.

Payments made directly to medical insurance companies and providers, or directly to colleges are not counted among the total gifts made.

I really wish I could give you a better answer. So sorry. But in today’s economy, perhaps it’s time to put some pressure on your legislators to change the tax laws to allow parents some benefits for having to help out once your children have lost their jobs due to their lack of oversight over our economy. They do have a lot to fix, don’t they? I hope things turn around for your family.

And remember, you can find answers to all kinds of questions about medical deductions and other tax issues, free. Where? Where else? At TaxMama.com

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