As you prepare your 2000 tax return, remember to add money you pay for a dependent parent’s health care to your medical outlays for yourself and other family members. These expenses might put total expenses over 7.5% of your adjusted gross income (AGI), which is the threshold for deducting medical expenses.
You may count medical expenses incurred for a parent who doesn’t qualify as a dependent, as long as you provided over half of his or her support last year. Your parent’s income won’t matter. When you add up medical expenses incurred for yourself, your spouse, your children, or your parents, don’t forget partial medical deductions for capital improvements made to alleviate a specific health condition. The cost of the improvement, minus home appreciation, will be deductible.
Suppose, for example, you installed central air-conditioning to help your live-in father cope with asthma. You spent $35,000 but the house appreciated in value by only $25,000. The excess $10,000 is a medical expense.
Be sure to get before-and-after appraisals, as well as a written recommendation a doctor, stating the reasons the improvement was necessary (not just desirable) to treat a specific condition.