How Generous Are
You?
Paying expenses for
others won’t necessarily get you a deduction
Often we are moved to help out family and friends by
paying some of their expenses. Did you know that the IRS won’t necessarily
allow a deduction on your tax return for the amount you pay?
For example, if you pay another person’s mortgage
payment or property tax, you are not entitled to deduct these amounts on
your return because you are not liable for the payment. Likewise, the
person for whom you made the payment is not allowed the deduction because
he or she did not make the payment.
A good alternative is to make a gift of cash to the individual and have
them make the payment on their own. This way, the deduction is not lost
(the recipient can claim the deduction.
Keep in mind, however, that if the amount you give is
in excess of $11,000 per year to one individual, the IRS requires you to
file a gift tax return.
If you provide more than half of the total support
for an individual during the year and that individual meets other
requirements to qualify as your dependent (such as limitations on income),
then you may be able to claim the dependency exemption for that person ,
and payment of some expenses for that person, such as medical costs, can
be deducted on your tax return.
