Submitted By: Carol
Answered: July 27, 2015 11:17 am

If I pay $50,000 toward my mother’s nursing home bill, is this subject to gift tax?

If you pay the money directly to the facility, there is no dollar limit on how much you can effectively gift to benefit your mother for purposes of federal gift taxes. What’s more, this action may even entitle you to include the payment with your own medical expenses if you itemize deductions. As long as you pay more than half of your mother’s support of the year and meet certain other tests, you can treat this medical payment on behalf of your mother as your own (even if you can’t take a dependency exemption for her because her gross income is more than the allowable limit, which is $4,000 in 2015).

Tax Glossary

Estimated tax

Advance payment of current tax liability based either on wage withholdings or installment payments of your estimated tax liability. To avoid penalties, you generally must pay to the IRS either 90% of your final tax liability, or either 100% or 110% of the prior year’s tax liability, depending on your adjusted gross income.

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