USA: Deducting Arthritis On Your Income Taxes

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Deducting Arthritis On Your Income Taxes

by Carol & Eustice, www.about.com, Your Guide to Arthritis.

Part 1 of 2 - How to Maximize Your Allowable Medical Expenses

You can deduct unreimbursed medical expenses which exceed 7.5 % of

your Adjusted Gross Income if you itemize deductions.

Making The Most Of Medical Deductions

Since you must exceed the 7.5% limitation, a critical strategy for

maximizing medical expenses is known as " bunching " . The idea is to

pay as many medical bills in one year as possible. Once your medical

bills for the year exceed the 7.5% limitation, all expenses above

that amount are fully deductible. You want to make all payments

possible in that year rather than waiting until the next year when

you again must exceed 7.5 %. With bunching you generally adopt a two-

year strategy. One year you pay all the expenses you can and take

the deductions, while the next year you only pay the expenses that

must be paid because you probably will not exceed the 7.5%

limitation the second year. Plan ahead to take advantage of as many

deductions as possible.

Allowable Medical Expenses

A deductible medical expense is any cost of diagnosis, cure,

mitigation, treatment, or prevention of a specific disease or any

treatment that affects a part or function of the body. Costs must be

for a specific ailment and not just for general health improvement.

The diagnosis of arthritis expands the list of possible allowable

medical deductions. A wide array of expenses are deductible. The

easy-to-identify expenses include doctor's fees, hospital costs,

laboratory bills, prescription medications, health care premiums,

and travel costs for obtaining medical care.

The following lesser known arthritis-related medical expenses may be

deductible:

Crutches, splints, braces, walker, scooter, wheelchair, and other

medical equipment.

Extra cost of orthopedic shoes over normal shoes.

Reclining orthopedic lift chair.

Special mattress and plywood bed boards for relief of arthritis.

(Revenue Ruling 68-212)

Adaptive aids and assistive devices Costs or extra costs

above " normal " items such as: heat and ice packs, exercise

equipment, large grip kitchen utensils, reachers, grabbers, dressing

and bathing aids.

Treatment by acupuncturist, chiropractors, osteopaths, indian

medicine man or Christian Science practitioners.

Hydrotherapy (water treatments), injections, and x-ray treatments.

The cost of adapting a car or home to limited abilities.

Capital improvements to property when primary purpose is medical

need (examples: swimming pool, hottubs, swim spa, elevator, special

lifts) are deductible only to the extent the cost exceeds the

increase in value of the property. The actual increase in value to

the home is best determined by an appraisal. Expenses incurred to

adapt a residence for a physical handicap such as ramps, support

bars, special door knobs and fixtures are presumed not to increase

the value of a home and are fully deductible.

Detachable home installations such as air conditioners, heaters,

humidifiers, air cleaners, and whirlpools used for the benefit of a

sick person.

Special cover-all makeup to alleviate the mental stress caused by

lupus rashes.

Medically unproven arthritis treatments are generally deductible

since the IRS has taken the position that it cannot make judgments

in the medical field. Payments to an unlicensed practitioner are

deductible if the type and quality of their services are not illegal.

Operating and maintenance costs for capital assets such as a pool,

spa, heater, air cleaner, etc. in terms of the water, electricity,

cleaning, repairs, maintenance and chemicals required are hidden

costs which are deductible. All the costs are deductible even if

none or only a portion of the capital asset was deductible.

A weight control program recommended by your doctor to reduce the

stress on arthritic joints. However, deductions allowed for special

diet foods may be restricted. See our Article: Can Food, Diet Foods

or Weight-Loss Programs Be Tax Deductible?

Please see IRS Publication 502 for a complete list of expenses which

may and may not be deducted.

Deducting Cost Of Swimming Pool

If swimming is prescribed as treatment or physical therapy, the cost

of constructing a home swimming pool may be partly deductible as a

medical expense. However, the IRS is likely to question the

deductions because of the possibility that the pool may be used for

recreation. If you can show that the pool is specially equipped to

alleviate your condition and is not generally suited for recreation,

the IRS will likely allow the deduction. For example, the IRS

allowed a deduction for a pool constructed by an osteoarthritis

patient. His physician prescribed swimming several times a day as

treatment. He built an indoor lap pool with specially designed

stairs and a hydrotherapy device. Given these features, the IRS

concluded that the pool was specially designed to provide medical

treatment. See our Article: When Are Pools, Spas and Other Home

Improvements Tax Deductible?

Go to: Part 2 - Deducting Arthritis on your Income Taxes

Don't miss any allowable medical expense deductions

Part 2 of 2 - Don't Miss Any Allowable Medical Expense Deductions

Business Expense vs. Medical Expense

Another way around the 7.5% limitation is when expenses can be

reclassified as something else. Some expenses are deductible as

business expenses rather than medical expenses. Claiming a business

deduction is not subject to the 7.5% limitation. If you are disabled

and have expenses which are necessary for you to be able to work

(impairment-related work expenses), you can take a business

deduction for these expenses, rather than a medical deduction. You

are disabled if you have either:

A physical or mental disability (for example, blindness or deafness)

that functionally limits your being employed

A physical or mental impairment (for example, a sight or hearing

impairment) that substantially limits one or more of your major life

activities, such as performing manual tasks, walking, speaking,

breathing, learning, or working

You can deduct impairment-related expenses as business expenses if

they are:

Necessary for you to do your work satisfactorily

For goods or services not required or used, other than incidentally,

in your personal activities

Not specifically covered under other income tax laws.

If you are self-employed the deduction is claimed on your Schedule

C. If you are an employee, the expenses are listed on your Form

2106. Also See our Section: Working and Disability Issues

Nondeductible Expenses

Many expenses, although seemingly related to arthritis health care,

are specifically not deductible. One example is the cost of over-the-

counter medicines such as aspirin, ibuprofen (Advil), ketoprophen

(Orudis), naproxen(Aleve) and acetaminpohen (Tylenol) even if you

have a doctor's prescription. However, some over-the-counter and non-

prescription products are still fully deductible. See our Article:

Can You Deduct Nonprescription Drugs or Supplements on Your Taxes?

In addition, medically prescribed marijuana, which is now also

commonly called " medical marijuana " , has also been ruled

nondeductible.

Essential Recordkeeping and Documentation

When deducting these medical expenses they should be properly

documented with receipts and you should have a written

recommendation from your doctor expressing the medical need. Keep in

mind many of these deductions may be considered a " gray area " and

any expense deemed personal rather than medical is not deductible.

The gray areas should not discourage you from deducting legitimate

medical expenses. Tax laws are complex and ever-changing.

The IRS does scrutinize large medical deductions so be sure to

obtain expert tax advice. A doctor's recommendation does not

guarantee IRS approval. The IRS can and does dispute the medical

necessity of expenses even if a doctor's recommendation is provided

as backup.

This article is not a substitute for professional accounting

services. Please consult a competent tax professional for answers to

your specific questions.

For More Information:

See IRS Publication 502