Tax breaks are out there, but you should not need a treasure map to find them. With the help of your tax advisor, you may be able to exercise a few deductions you had not considered previously. Over the coming months, PYA will don the explorer hat and seek out some of the ever-elusive tax breaks.
Since healthcare reform is top-of-mind, we will start with medical deductions. If you participate in a Section 125-Healthcare Reimbursement Plan (often known as a cafeteria plan or flexible spending account), Health Saving Accounts (HSA) or Archer Medical Saving Accounts (MSA), a qualified medical expenditure can be reimbursed by the plan. The reimbursement or distribution is not taxable, even if the medical expenditure is not covered by your health insurance. Remember that the reimbursable amount is the amount incurred in excess of any insurance reimbursement.
Below are a few potentially reimbursable medical expenditures:
Self-prescribed diagnostic tests
Medical care includes a wide range of diagnostic services. Under appropriate circumstances, a physician’s recommendation is not necessary for a procedure, test, or expenditure. If the items are wholly medical in nature and serve no other function in everyday life, a physician’s recommendation is not required in order for them to be reimbursable by the plan or be deductible as medical expenses. Examples include annual physical exams; full-body electronic scan; home pregnancy test kits; body composition; screening tests such as lung capacity, hearing, vision, and osteoporosis (women only); CT Heart Calcification Scan; CT lung scan; and certain “take home” screening tests.
Over-the-counter medicines (OTC)
Medications such as aspirin, antacids, allergy or cold medicines, and pain relievers must be prescribed by a physician in order to be reimbursed by the above plans.
Facilitation of Pregnancy
Infertility treatments qualify as deductible or reimbursable expenses. Also reimbursable are the costs associated with acquiring a donated egg during fertility treatments, including the donor’s fee for time and expense; agency fees for procuring a donor; expenses of medical and psychological testing of the donor; post-procedure medical care or psychological assistance of the donor; and legal fees for establishing an agreement between the donor and the taxpayer.
For more information about medical deductions, health plan reimbursement, and other tax breaks, contact the experts listed below at PYA, (800) 270-9629.
