Final Answer:
Yes,Chad can claim James' medical expenses because the IRS allows deductions for qualifying relatives' medical costs, even if they don't meet the income threshold for dependency.
Step-by-step explanation:
Chad can claim James' medical expenses because the dependency status for medical expense deduction is different from claiming someone as a dependent for other tax purposes.
The Internal Revenue Service (IRS) allows taxpayers to claim medical expenses for individuals who would have qualified as dependents, except for the income threshold. In this case, although James earns $7,500, he meets the other criteria for dependency, such as being Chad's son. The IRS recognizes the financial responsibility parents bear for their children's medical care, and thus, Chad can include James' medical expenses in his own deductions.
It's important to note that medical expense deductions have different rules than other tax benefits, making it possible for Chad to claim James' medical expenses even if James does not qualify as a dependent based on income.
This provision aims to alleviate the financial burden on parents who support their children's healthcare costs, irrespective of their dependent status for other tax purposes.