Whoa, Derval, careful there. First of all, read what I wrote in my first post in the thread above, particularly the “footnote” next to the asterisk, and you’ll see that in most cases, buying aids for a grandparent would not be tax deductible. Your aids may be deductible, your spouse’s aids may be deductible, and if your young child needs aids, those are deductible, but generally not aids or any other medical or other otherwise deductible expenses for other people including relatives. The only time it is deductible is if your grandparent is your tax dependent as defined by the IRS, not by you. You would have to be providing more than half your grandparent’s financial support, you would have to claim him as your tax dependent on your return, and he would have to file his tax return stating that he was a dependent for someone else. If he does this, he can increase his own taxes due because he loses the ability to claim a standard tax deduction for himself, so if he has more than a few hundred dollars of non-Social Security income, he’ll owe tax on all of that. Also, any tax break you get for this will be at most a few hundred dollars, not nearly as much as the aids will cost. It’s a potential tax deduction (that partially reduces your taxable income), not a tax credit. And only the part of eligible medical expenses exceeding 7.5% of your income is deductible, anyway.
Secondly, when you get in to paying someone else’s bills (and this includes hearing aids for an adult relative who is not currently your tax dependent), you have to be careful not to cross the line on gift taxes, or you can cause other expensive tax problems for yourself or for your estate. Now for 2011, the gift tax threshold is in the low five figures. It’s higher than you would pay for just hearing aids, but if you begin paying your grandfather’s other medical bills or expenses including rent or nursing care, you can definitely be generous to the point that you get yourself in trouble tax-wise. The reason they have gift tax rules like this is that wealthy people used to get around estate taxes by paying bills for relatives, which would deplete their estates. That doesn’t work any more. Uncle Sam still collects his due in the form of gift taxes and they can bite middle-income people as well as wealthy people. Gift and estate taxes, if they apply, are HIGH.
Now you may say, yeah, but how will they know if I claim a tax deduction for my grandparent’s hearing aids? Truth is they won’t know unless they audit your return or ask you to prove your expenses, but this is not a road you should go down without a much better understanding of the tax rules than you showed in this post. Errors here can get quite expensive.