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

Tax attributes

When debts are cancelled in bankruptcy cases, the cancelled amount is excluded from gross income. Tax attributes are certain losses, credits, and property basis that must be reduced to the extent of the exclusion.

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