Dental expenses and loans

Taxes General Forum - Tax professionals meeting place and answers to queries. (Moderated) 

Yahoo!   Google   Windows Live   del.icio.us   digg   Netscape

Subject Author Date Dental expenses and loans Russ in San Diego 03-21-2009  Re: Dental expenses and loans Bill 03-21-2009  Re: Dental expenses and loans Gene E. Utterback, EA, RF... 03-21-2009  Re: Dental expenses and loans Russ in San Diego 03-22-2009  Re: Dental expenses and loans D. Stussy 03-21-2009  Re: Dental expenses and loans Paul Thomas, CPA 03-21-2009
Posted by Russ in San Diego on March 21, 2009, 12:25 pm Please log in for more thread options A relative had some very significant dental surgery performed in 2007. The doctor's office arranged a loan with a third-party lender for her. She paid much of that loan off in 2007, and the remainder in 2008. Since the lender was not the doctor's office, am I correct in assuming that her loan payments in 2008 are not deductible? And is it also the case that there's no way to carry forward these medical expenses? The cost was actually around double her income in 2007. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Bill on March 21, 2009, 12:44 pm Please log in for more thread options russgoog@gmail.com (Russ in San Diego) posted: >A relative had some very significant dental >surgery performed in 2007. The doctor's office >arranged a loan with a third-party lender for >her. She paid much of that loan off in 2007, >and the remainder in 2008. >Since the lender was not the doctor's office, >am I correct in assuming that her loan >payments in 2008 are not deductible? >And is it also the case that there's no way to >carry forward these medical expenses? The >cost was actually around double her income in >2007. >From your report, it seems that dental bill was actually paid in 2007, with the proceeds of the loan. Loan interest or payments are not deductible (except in the case of home mortgage interest). Also, there is no way to carry forward excess medical expenses. Bill -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Gene E. Utterback, EA, RFC, AB on March 21, 2009, 2:19 pm Please log in for more thread options >A relative had some very significant dental surgery performed in 2007. > The doctor's office arranged a loan with a third-party lender for > her. She paid much of that loan off in 2007, and the remainder in > 2008. > > Since the lender was not the doctor's office, am I correct in assuming > that her loan payments in 2008 are not deductible? > > And is it also the case that there's no way to carry forward these > medical expenses? The cost was actually around double her income in > 2007. Your assessment is essentially correct. BUT what you've missed is that since she used the loan proceeds to pay for dental expenses in 2007 ALL of those expenses were deductible in 2007. Remember, for a cash basis taxpayer you get to deduct expenses in the year you pay them. She paid dental expenses in 2007, that she used a loan is besides the point. Her dental expenses were deductible in 2007. She may want to revisit her 2007 return, it may be beneficial for her to amend. Gene E. Utterback, EA, RFC, ABA -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Russ in San Diego on March 22, 2009, 6:30 pm Please log in for more thread options On Mar 21, 11:19 am, "Gene E. Utterback, EA, RFC, ABA" > > >A relative had some very significant dental surgery performed in 2007. > > The doctor's office arranged a loan with a third-party lender for > > her.  She paid much of that loan off in 2007, and the remainder in > > 2008. > > > Since the lender was not the doctor's office, am I correct in assuming > > that her loan payments in 2008 are not deductible? > > > And is it also the case that there's no way to carry forward these > > medical expenses?  The cost was actually around double her income in > > 2007. > > Your assessment is essentially correct.  BUT what you've missed is that > since she used the loan proceeds to pay for dental expenses in 2007 ALL of > those expenses were deductible in 2007. > > Remember, for a cash basis taxpayer you get to deduct expenses in the year > you pay them.  She paid dental expenses in 2007, that she used a loan is > besides the point.  Her dental expenses were deductible in 2007.  She may > want to revisit her 2007 return, it may be beneficial for her to amend. > > Gene E. Utterback, EA, RFC, ABA Thanks. Actually, I didn't miss that. She actually DID deduct all those medical expenses in 2007, reducing her taxable income to zero. I prepared her taxes and came to the same conclusion as the consensus here. I was just triple-checking because this relative has asked me about it several times, and I wanted to verify my conclusion before it's too late to file a 1040X, and while there's still time to reflect any change in her 2008 return. And now I'm confident I got it right. Unfortunately. 8-) -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by D. Stussy on March 21, 2009, 2:25 pm Please log in for more thread options > A relative had some very significant dental surgery performed in 2007. > The doctor's office arranged a loan with a third-party lender for > her. She paid much of that loan off in 2007, and the remainder in > 2008. > > Since the lender was not the doctor's office, am I correct in assuming > that her loan payments in 2008 are not deductible? > > And is it also the case that there's no way to carry forward these > medical expenses? The cost was actually around double her income in > 2007. If there were any business loss at all, there could be an NOL. Also watch for things like a state income tax refund for 2007 received during 2008 to potentially (and probably0 be non-taxable under the tax-benefit rule. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Prepayment of dental costs December 4, 2008, 1:30 pm Stafford loans April 9, 2007, 3:29 am Refund loans January 10, 2008, 9:46 pm H&R Block and RAL Loans November 15, 2008, 7:27 am Taxes on private loans January 30, 2007, 1:26 pm Student loans deductions February 5, 2008, 4:37 pm Where to write off Prosper Loans that have been charged off February 7, 2009, 4:52 pm Reporting Payments on Compound Interest Loans December 24, 2008, 9:55 pm Consolidate With Medical School Loans and Save Money ! May 10, 2007, 11:34 pm I cosigned my son's student loans. Did I provide this support or did he? April 10, 2009, 2:44 am