Overlooked Medical Deductions Abound

BY ALISTAIR M. NEVIUS

  

 
 

While it is common knowledge that taxpayers may deduct qualified medical expenses for themselves and their dependent children, other opportunities to deduct medical expenses are not so widely known. One is the deduction of medical expenses that a taxpayer pays on behalf of others, such as elderly family members and domestic partners, even if they are not claimed as dependents. Several other medical deductions are commonly overlooked.

RELAXED DEFINITION OF “DEPENDENT”
Taxpayers can deduct qualifying medical expenses paid on behalf of individuals whom they could claim as dependents except for the fact that the individuals claim dependents of their own, file a joint return or receive gross income in excess of the exemption amount. The child of an ill parent, for example, can deduct payments for the parent’s health care costs provided all other dependency requirements are met, even though the parent files a joint return and has gross income greater than $3,400.

Unrelated members of a taxpayer’s household may also qualify as dependents. In some circumstances the medical expenses of a domestic partner are deductible. However, the dependency requirements for unrelated parties are stricter than those for family members; an unrelated person must share the same principal place of abode as the taxpayer and be a member of the taxpayer’s household for the taxpayer’s entire tax year.

LONG-TERM CARE COSTS
The treatment of a chronic illness or disability can be extremely costly. Fortunately, certain services that would otherwise be nondeductible as medical expenses are deductible qualified long-term care costs:

  1. Long-term care insurance premiums subject to age-related limits.
  2. Maintenance and personal care services, including meal preparation and housekeeping, if the services are rendered to assist with daily activities that chronically ill individuals are unable to perform on their own.
  3. Meals and lodging for an in-home caregiver if the caregiver is unrelated or is licensed.
  4. Nursing homes, assisted-living facilities and dementia facilities. All reasonable costs—including those for meals, lodging and personal care—are deductible if the patient is admitted for medical reasons.

COMMONLY OVERLOOKED DEDUCTIONS

  1. Nonelective cosmetic surgery (that is, promoting proper function of the body or preventing or treating illness or disease).
     
  2. Dental work, if not purely cosmetic.
     
  3. Hearing aids and prescription eyeglasses, including the cost of examinations and prescriptions.
     
  4. Non-physician-provided medical services if related to a medical condition, including nontraditional treatments, such as acupuncture and Christian Science healing practices.
     
  5. Psychotherapy and psychiatric counseling.
     
  6. Smoking-cessation programs, including prescription drugs to alleviate nicotine withdrawal.
     
  7. Transportation to and from medical treatment, including tolls and parking.
     
  8. Weight-loss programs for treatment of physician-diagnosed disease.
For a detailed discussion of the issues in this area, see “Opportunities to Claim Health Care Expenses as Deductions,” by Donald L. Williamson, CPA, J.D., in the October 2007 issue of The Tax Adviser.

—Alistair M. Nevius, editor-in-chief
The Tax Adviser

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