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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29569
Experience:  Taxes, Immigration, Labor Relations
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If someone recieves a gift card and then uses it in medical

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If someone recieves a gift card and then uses it in medical bills I know you can write it off on medical for taxes but what if you find out later that money was stolen ? Can the IRS come back on them for that write off? The person who have the gift cards is having to amend their taxes to pay the income on them now

Lev :

Hi and welcome to our site!
Gifts are not taxable income in the US.
But stolen property is treated as illegal income. Regardless of criminal penalties - illegal income is taxable and is added to the taxable income.

Lev :

So - the person who steel the money - if confirmed - will be required to include that amount into his taxable income.

Customer:

but what does that do to the people who wrot if off as an expense but didn't know it was stolen

Customer:

will the irs come back on them or could they

Lev :

If you received the card as a gift - that is not a taxable income.
It doesn't matter how you used funds.
If the card was stolen - you might be required to return it back - but that is not your taxable income - because you did nothing wrong.

Customer:

they were gift cards they purchased through work not credit cards does that make sense

Customer:

just trying to see what the people need to do that was given this gift. the lawyer is asking the recievers of these gifts to write down how much roughly was given to them. just want to make sure they aren't able to come back on them. trying to be a good friend

Customer:

hello

Customer:

I realize it isn't taxable but can anything be done to them sense they wrote it off as a medical expense. that is what it went towards. have reciepts

Lev :

If these cards are stolen - you might be asked to pay back by a criminal court.
That is not a concern of the IRS. From the IRS prospective - that is a gift and it is not taxable.
How to use funds and if your expenses are deductible - that would not be affected.
Because teh gift i snot taxable - if you will be required to pay it back - there will not be any deduction from that repayments.

Customer:

the person who stole the money is working with them and is paying back whatever they decide on. they aren't asking the recievers anything except a written statement of what was given to them

Lev :

Ok - t5hat will make issues less complicated. So - the person who stole the property will pay back from his/her own funds - and gift previously made would not be affected.

Lev and other Tax Specialists are ready to help you
Customer: replied 3 years ago.
So if someone gives you gift card or cash or whatever and u use it on a deductible expense you can deduct it. That's what u r saying right

What I said - the gift in not TAXABLE income for the recipient,
However the donor generally may not deduct the gift,
Indeed - only gifts to qualified charitable organizations are deductible.
But gifts to any specific persons or gifts that benefit any specific person may not be deducted by the donor.

 

If you paid medical expenses - such expenses are deductible regardless which money you used. Bt that doesn't mean you are deducting a gift - you are deducting your medical expenses that you paid.

Customer: replied 3 years ago.
I'm not asking if the money is taxable income I am trying to ask if the recipent receives a gift like cash or a gift card and they use it to pay a medical bill can the recipent include that payment as a medical deduction when they add up all their medical expenses for that year
Yes - the money used to pay medical bills are deductible for the payer.
That is regardless if the money were gifted or received any other way.
Lev and other Tax Specialists are ready to help you