Updated List of Approved Medical Deductions Is Valuable Tax Preparer Material

The notable feature about the IRS list of qualified medical expenses is the omissions. Tax professionals consult the listed expenses for more purposes than merely studying for the tax preparer exam. Ever year, the items named are eligible for the medical itemized deduction when preparing tax returns.

Because of the limitation imposed on deductible medical costs, most taxpayers must dig fairly deep to qualify for the deduction. Knowing the types of expenditures to exclude is essential tax preparer training. In order to exceed the threshold of 7.5 percent of adjusted gross income, individuals usually need significant out-of-pocket medical expenditures. They are not allowed to pad their totals with ineligible medical outlays.

The general rule followed by a Registered Tax Return Preparer is that elective medical expenses are not tax-deductible. This includes most cosmetic surgery and weight-loss programs. However, tax preparer material does reflect that sometimes expenditures of this medical nature do qualify for tax deduction. Cosmetic surgery related to reconstruction after a mastectomy is a tax qualified medical expense. So is a weight loss program recommended and supervised by a physician.

Out-of-pocket costs for these categories of medical treatment can rise substantially in this age of high-deductible health insurance policies. Identifying other routine qualified medical costs then becomes an important tax return preparer job in order for the total to exceed 7.5 percent of AGI. Additions include co-payments for doctor visits, dental work, and eyeglasses.

A complete list of qualified medical expenses is contained in IRS Publication 502. Excluded from the list are over-the-counter medicines and first aid items. The only medications that qualify are those obtained by doctor prescription. Taxpayers can learn from someone with tax preparer training to omit health club dues and treatments for hair loss. Basically, anything not prescribed by a doctor for treatment of a medical condition doesn't make the list for tax deductibility.

The IRS does correct oversights from its list of qualified medical expenses. In February 2011, breast pumps and other lactation devices were announced as eligible for tax deduction.

Sometimes a claim for medical tax deduction is settled in Tax Court. This occurred in a 2011 ruling regarding the sex change operation of Rhiannon G. O'Donnabhain, who was born as Robert Donovann. The IRS originally had disallowed the $5,679 medical expense deduction O'Donnabhain claimed on a 2001 tax return. The Court decided in favor of O'Donnabhain, who was diagnosed by qualified healthcare professionals with gender identity disorder - a serious impairment widely recognized in the medical community.

The judge did, however, rule that the only deductible expenses are those for sex reassignment surgery and hormone therapy. A tax deduction was not allowed for breast augmentation surgery. The IRS officially decided to not contest the ruling.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

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