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3 new ways to boost medical deductions

by on
in Small Business Tax,Small Business Tax Deduction Strategies

A trio of new IRS rulings may bolster your chances for claiming a medical expense deduction this year.

Strategy: Latch on to any deductible medical expense you can. For 2011, the tax law limits the write-off to the unreimbursed medical expenses in excess of 7.5% of your adjusted gross income (AGI).

Here’s a quick recap of the three new rulings.

1. Special diet food: The IRS has ruled that the cost of a special diet qualifies for the medical deduction to the extent it exceeds the cost for regular meals. (IRS PLR 2011-0035) But the special diet food must be prescribed by a physician for medical purposes. It can’t simply improve your general health.

2. Alternative medicine: The costs of acupuncture, chiropractor services and Christian Science practitioner services qualify as deductible medical expenses. (IRS PLR 2011-0045) In addition, the cost of treatment at a health institute is deductible, as well as the cost of medicines, if it is prescribed by a physician (but see below).

3. Hearing aid repairs: Naturally, the cost of a hearing aid qualifies for the medical expense deduction, but now the IRS says that repair costs are eligible, too. (IRS PLR 2011-0055) Add on the cost of batteries needed for the hearing aids.

Tip: Taxpayers who use marijuana for health reasons can’t deduct the cost as a medical expense, even if they live in states where medical marijuana is legal. (IRS PLR 2011-0005)

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