Q and A: Taxpayers can appeal if IRS imposes penalty
It may not be tax season, but tax questions still arise. Here with some answers is IRS expert Jesse Weller. QUESTION: If a Social Security disability recipient has never received a Form 1099 advising that payments are taxable, is there liability ...
It may not be tax season, but tax questions still arise. Here with some answers is IRS expert Jesse Weller.
QUESTION: If a Social Security disability recipient has never received a Form 1099 advising that payments are taxable, is there liability for back taxes when IRS tries to collect five years later?
ANSWER: Tax liability would not be determined (or affected) by whether a taxpayer received or did not receive a Form SSA-1099, Social Security Benefit Statement. That would also be true of other types of income reported on Form 1099 or wages reported on Form W-2.
It is possible to appeal a failure-to-pay penalty for reasonable cause. If a taxpayer is billed for late-payment penalty charges and feels there is reasonable cause, he or she can send an explanation along with the payment, or call the IRS at 800-829-1040 for assistance.
Generally, interest charges are not removed and an exception to the penalty cannot be determined until the tax is first paid in full.
Q: We have an attendant assisting with the care of my 86-year-old husband for nine hours per day, seven days a week. The total expense exceeds $6,000 per month. Our long-term care policy pays about $2,000. Is the remainder tax-deductible?
A: It is possible that part or all of the unreimbursed expenses qualify as a medical-expense deduction. If so, you can deduct total medical expenses that exceed 7.5 percent of your adjusted gross income on Schedule A, Itemized Deductions.
Amounts paid for nursing services or qualified long-term care services are deductible. This includes premiums paid for qualified long-term care insurance contracts.
Nursing services do not have to be performed by a nurse, but need to be the kind of services a nurse usually performs, either in your home or another care facility. This would include giving medications, changing dressings or bathing and grooming the patient.
You can also include part of the amount you pay for the attendant's meals or additional amounts you pay for household upkeep because of the attendant.
If you pay employment taxes as a household employer, you can also deduct as medical expenses your cost of Social Security, Medicare, federal unemployment and state employment taxes.
Generally, only the amount spent for nursing services is a medical expense. An exception is for personal services provided as part of qualified long-term care.
Certain maintenance or personal care services provided for qualified long-term care can be included as medical expenses. Qualified long-term care services include diagnostic, preventive, therapeutic, treating, mitigating, rehabilitative services and maintenance or personal care services that are required by a chronically ill individual and prescribed by a licensed health care practitioner.
For more information about deductions for nursing and qualified long-term care services, see IRS Publication 502, Medical and Dental Expenses, at IRS.gov.