Not So Common Medical Expense Deductions

Telling Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

Benjamin Franklin famously declared that the only things certain in this world are death and taxes. Luckily, in America, trying to stave off the former can save you some money on the latter. To help you out, I’ve compiled a couple of important things you should know regarding your healthcare and the tax code.

Most filers use the standard deduction instead of itemizing, because the tables allow a base of $5,700 for individual taxpayers or those taxpayers married filing separately; $11,400 for taxpayers married filing jointly or qualifying widow(er); and $8,400 for taxpayers filing as head of household. Even if you use the itemized schedule, the medical deduction is number five in popularity, behind taxes, charity, home mortgage interest, and miscellaneous deductions. Percentage wise, it means that about 6percent of you deduct medical expenses. The medical expense is usually met by those who have to pay for their own medical insurance, mainly self-employed, and seniors.

The medical expense was put into the tax code by the Revenue Act of 1942 for “extraordinary” medical expenses (still undefined), and expenses exceeding 5 percent of adjusted gross income, but subject to a cap. It was intended to be a temporary form of relief during the war, as is written in the Senate Finance Committee report, “This allowance is recommended in consideration of the heavy tax burden that must be borne by individuals during the existing emergency and of the desirability of maintaining the present high level of public health and morale.” This meant that this was for the veterans who had medical complications and heavy medical expenses.

The law has been changed to lower the adjusted gross income percentage from 5 percent to 3 percent to 7.5 percent, and soon to be 10 percent. The cap has been doubled, and now eliminated. Various allowable deductions have been eliminated, expanded, and redefined and clarified. For example, transgender surgery is deductible, but infant formula is not; long-term care insurance is now deductible, as is long-term care services; until the new healthcare bill, over-the-counter items like aspirin and first aid kits were allowed in your employer medical plans, but not any longer.

With the deficit, you can expect to see more changes here. Why? The real estate lobby is stronger than the medical lobby? Healthcare is not as important as charity? Neither of which have a material  percentage threshold.

Most of you know the obvious medical expenses, but for discussion at your barbecues, here are a few that I have run into in my practice that are not so obvious:

• Acupuncture.
• Air conditioner necessary for relief from allergies or other respiratory problems.
• Artificial teeth and limbs.
• Birth control pills prescribed by a doctor.
• A clarinet and lessons to treat the improper alignment of a child’s upper and lower teeth.
• Contact lenses.
• Cosmetic surgery to improve a deformity (determined by your doctor).
• Dental fees and supplies.
• Diet, special. When prescribed by a doctor, you can deduct the extra cost of purchasing special food to alleviate a specific medical condition.
• Elastic hosiery to treat blood circulation problems. (Attention nurses.).
• Exercise program if recommended by doctor to treat a specific condition.
• Extra rent/utilities for a larger apartment required in order to provide space for a nurse/attendant.
• Fertility treatment:  Limited to procedures such as in vitro fertilization (including temporary storage of eggs or sperm) and surgery, including an operation to reverse prior surgery that prevented the person operated on from having children.
• Household help for nursing care services.
• Legal fees paid to authorize treatment for mental illness.
• Lifetime care advance payments.
• Lodging expenses while away from home to receive medical care in a hospital or medical facility.
• Long-term care insurance and long term care expenses (with limitations).
• Mattresses and boards bought specifically to alleviate an arthritic condition.
• Medical aids. This includes wheelchairs, hearing aids and batteries, eyeglasses, contact lenses, crutches, braces, and guide dogs (including costs paid for their care).
• Medical conference admission costs and travel expenses for a chronically ill person or a parent of a chronically ill child to learn about new medical treatments.
• Nursing care.
• Nursing home expenses if there to obtain medical care.
• Reclining chair bought on a doctor’s advice by a person with a cardiac condition.
• Special education tuition of mentally impaired or physically disabled person.
• Smoking cessation programs.
• Swimming costs, if therapeutic and prescribed by a physician.
• Television equipment to display the audio part of a TV program for hearing-impaired persons.
• Transportation costs for obtaining medical care.
• Travel expenses for parents visiting their child in a special school for children with drug problems, where the visits are part of the medical treatment.
• Weight loss program, if it is recommended by a doctor to treat a specific medical condition or to cure any specific ailment or disease.
• Whirlpool baths prescribed by a doctor.
• And just approved by the Tax Court: Although caregivers aren’t licensed healthcare providers, and the payments to them are not for the diagnosis, cure, mitigation, treatment, or prevention of disease, the payments satisfied the requirements to be considered qualified long-term care services. This means that the cost of maintenance and personal care services qualifies as a medical expense for patients who are certified by a healthcare professional as being unable to do at least two of the six activities of daily living: eating, toileting, transferring, bathing, dressing and continence. The certifying professional can be a doctor, registered nurse or licensed social worker. In addition, that person is required to approve the care program for the patient.

Not:

• Medical marijuana, even if the state allows it.

Check out the IRS Publication 502, Medical Expenses for a more comprehensive list.

Have a healthy summer.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.