Viewing Question: What is the most tax friendly way to pay my grandson’s medical bills?

What is the most tax friendly way to pay my grandson’s medical bills?

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My grandson is getting gender reassignment surgery and I want to pay my grandson’s medical bills. I am sure that all the surgery will cost tens of thousands of dollars. What is the most tax efficient way to do this?

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  1. First of all, insurance may cover gender reassignment surgery. If it doesn’t, there is a medical exemption from the gift tax rules, so if you pay their bills directly, your payments will not be considered taxable gifts regardless of the amount. However, you need to be very careful here. In addition to the gonadectomy and replacement surgeries, there are a lot of other surgeries (e.g. brow lift, voice modification) that may help an individual complete their gender reassignment. Laws and regulations concerning gender reassignment surgery are still in their infancy and many of these other surgeries may be considered cosmetic. Cosmetic surgery is not covered under the medical exemption and may eat into your gift tax exemption. This is an evolving field and to navigate it, you need a qualified tax professional.

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