The single most important thing to remember is to “get the prescription”. Only documented deductions will survive a tax audit. This article will disclose some of the eye-opening medical deductions the IRS has allowed. Medical deductions You can only deduct medical expenses that exceed the limitations under the new tax rules, but the IRS and court decisions have expanded the definition of deductible medical costs. Plan ahead to take advantage of as many medical expenses as possible. Medical deductions can be taken for the costs of diagnosis, treatment or prevention of disease or for affecting any structure or function of the body (except for unnecessary cosmetic surgery). Limitations: Treatment must be specific and not for general health improvement. Example: The IRS successfully denied deductions for the cost of weight¬ control and stop-smoking classes that were designed to improve general health, not to treat a specific ailment or disease. On the other hand, a person with a health problem specifically related to being overweight such as high blood pressure might be allowed the deductions. If an employer tells an overweight employee to lose weight or leave, and the boss has previously enforced such a rule, the plump employee can deduct the cost of a weight-loss program, because money spent to help keep a taxpayer’s job is deductible. The IRS says it will allow a deduction if a physician prescribes a weight reduction program for the treatment of hypertension, obesity or hearing problems. The same could go for a person whose doctor certifies that an end to cigarette smok¬ing is necessary for a specific medical reason (such as emphysema). The same logic applies to home improvements. The cost of a swimming pool might be deductible if it is specifically necessary for a person who has polio, as would the cost of an elevator for a heart patient. Caution: Only the actual cost is deductible. The IRS makes taxpayers subtract from the cost of an improvement the amount that the features add to the value of the residence Example: If a swimming pool costs $10,000 but adds $4,000 to the value of the property: only $6,000 would be tax-deductible. To determine the value have the property appraised before and after the improvement (The appraisal fee is deduct¬ible as a miscellaneous itemized deduction). IRS Deductions can be arbitrary: A professional singer was not allowed to deduct the cost of throat treatments as a business expense, but an IRS agent did allow a deduction for a dancer who found it necessary to her career to have silicone breast implants. Medically unproven treatment is generally deductible, since the IRS has taken the position that it cannot make judgments in the medical field. For example, Laetrile treat¬ments are deductible if the taxpayer receives them. So is legal marijuana. |
A medically prescribed diet is deductible only to the extent that its cost exceeds that of a regular diet. Since fish, vegetables, breads, and poultry are common elements of a normal diet, it is highly doubtful that the IRS would allow a deduction for them.
Taxpayers on special diets may be able to get some kind of deduction under certain circumstances. For example, when a person who was traveling was required to have a salt-free diet, the Tax Court did allow him to deduct charges imposed by restaurants for preparing such meals, as well as taxi fares that he had to pay to get to the restaurants that were willing to prepare them.
Unusual Medical Deductions • Acupuncture • Addiction therapy • Clarinet and lessons bought on a doctor's advice to correct tooth defects. • Companion hired to escort blind children to school • Contact lens insurance • Dentures, hearing aids, orthopedic shoes. • Detachable home installation such as air conditioners, heaters, humidifiers, air cleansers used for the benefit of sick person • Dust-free room for people who have allergies. • Elastic stockings ordered by a doctor to alleviate varicose veins • Extra rent for a larger apartment required to make room for a nurse/attendant • Fluoridation device installed at home on a dentist’s recommendation • Long-distance telephone counseling for a person with a drug problem • Maintenance costs of a home swimming pool for a person with emphysema • Mattress and boards to alleviate an arthritic condition • Sex counseling by a psychiatrist for a husband and wife • Trained cat to alert its hearing-impaired owner to unusual sounds • Wigs to alleviate mental stress caused by loss of hair
ABOUT THE AUTHOR: Eugene E. Vollucci, is considered to be one of the foremost authorities on real estate taxation and rental income investing and has authored four books in these fields. He is the Director of the Center for Real Estate Studies, a real estate research organization. To learn more about the Center for Real Estate Studies, please visit our web site at http://www.calstatecompanies.com
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