Do you have a lot of medical bills that you pay on each month? Could those medical bills be deducted from your tax bill this year? I was helping my mother take care of all of her finances after my dad passed away. I didn't realize how many bills she had coming in each month for medical treatments that my dad had undergone months, even a year earlier. I started doing some research about medical bills and tax deductions. If you have medical bills, take a minute to read through this blog to gain some knowledge that can help you decide what you can do when tax time comes around.
The loss of a newborn baby is a terrible tragedy for any parent. And sadly, it also comes with practical challenges that the same parent or parents must face. One of these is its impact on your income taxes. Here's what parents should know about completing their tax forms after losing a child to death.
1. You May Claim the Child
Your child was a member of your family and household, and the IRS treats them as such. You may claim the child as you would any other dependent, particularly on a joint return. If you and the child's other parent do not file jointly, consult your tax preparer to determine who should claim them.
2. Credits and Deductions Apply as Normal
As mentioned, the IRS (and most state tax agencies) treat your late child as a family member no matter how short their life was. And they do so for the entire year. The traditional rules regarding how long a child must have lived with you during the tax year are suspended in the case of a baby who was born and died in the same year. You may either claim the full annual deductions or credits.
3. You May Deduct Medical Costs
If you suffered unexpected or additional medical costs for either the baby or the parent, these are generally deductible on your taxes. High medical expenses in a single year may make it advantageous to itemize your tax deductions this year — even if you normally take the standard deduction — or to file either jointly or separately.
4. Legal Damages May Be Taxable
Did the actions or inactions of someone cause your child's death? Parents who pursue a personal injury or wrongful death legal case should consult with their tax preparer to see if any damages or settlements are taxable income. In most cases, damages are non-taxable income. However, there is an exception for damages to compensate for lost income.
5. Hire a Professional Tax Preparer
Even if you normally file your own taxes, it's a good idea to work with a professional following the loss of a child. This is an extremely difficult time for families, and outsourcing this job could help reduce your burden. In addition, your tax situation may be more complicated this year, so you don't want to make any unnecessary errors and create red flags with the tax agencies.
Where to Start
When you're ready to tackle your taxes following the loss of a child, start by meeting with a tax preparation service in your state. They'll work with you to make this as easy and stress-free as possible while ensuring that your family suffers no further delays, problems, or losses on your income taxes.
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