Can Facial/Buttock Wasting Reconstruction Costs be Deducted from US Income Taxes?
Someone was nice enough to do some research on this topic for me (from my list pozhealth at yahoogroups.com)
Hi Nelson,
To our friends in other countries – ignore this message! It’s about US tax.
As is usual with tax, there’s no simple yes/no answer to your question. My answer boils down to – it SHOULD be deductible, and it’s worthwhile trying, but if you are audited, there’s a good chance that it will be reversed and you will be billed for tax and interest, and possibly penalty.
Deductibility of medical expenses comes down to “medical necessity.” Internal Revenue Code section 213(a) says this:
“There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent …, to the extent that such expenses exceed 7.5 percent of adjusted gross income.”
In other words, you add up all your allowable medical expenses, and if they are more than 7.5% of your adjusted gross income (also called AGI – the last line of page 1 of your Form 1040), then the excess is allowed as an itemized deduction. If your AGI is $100,000, and your total medical expenses are $10,000, your itemized deduction will be $2,500. Your total itemized deductions have to exceed your “standard deduction” to get any benefit. The standard deduction for a single person in 2007 is $5,350.
By the way, as for medication, section 213(b) says “An amount paid during the taxable year for medicine or a drug shall be taken into account … only if such medicine or drug is a prescribed drug or is insulin.”
So, no deduction for aspiring or cough syrup.
Now, in the tax code, you always have to look for the definition of everything. Section 213(d)(1) says “The term ‘medical care’ means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purposes of affecting any structure or function of the body …” And then it goes on to also allow deductions for certain medical-related travel expenses, for long-term care, and for medical insurance premiums.
It sounds from the above like facial and buttock reconstruction would be covered – it mitigates disease (effect of the treatment of a disease, which amounts to the same thing), and does affect bodily structures.
However, section 163(d)(9) says “(A) The term ‘medical care’ does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease. (B) … The term ‘cosmetic surgery’ means any procedure which is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.”
We have two problems, then. First, anything that can ALSO be cosmetic, is very hard to prove as being medically necessary – it’s the same reason we have trouble getting our insurance providers to cover the treatment. The IRS is extremely skeptical of such deductions. In addition, the IRS is very skeptical of any treatment that addresses a mental/emotional problem, as opposed to a physical problem. So if you have your butt fixed because it’s painful to sit, that’s a physical issue. If you have your face fixed because you can’t even recognize yourself in the mirror and it throws you into a deep depression – the IRS may not be sympathetic.
This is a heavily-contested subject – not lipoatrophy treatment, but deduction of cosmetic treatment.
There is no requirement that treatment be provided in the US, and if you can show that it cost less because you had it done elsewhere, that may help, although it also may look to suspicious to examiner, particularly if it was done in a place that is also a vacation spot (hmmm, Baja Mexico, Brazil) … and the regulations related to medical travel expenses mention that a “vacation for to improve general health” is not deductible so you’ll need to be ready to defend against that.
The IRS has a publication on Medical Expenses called Publication 502. Here’s what it says about cosmetic surgery:
“Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. This includes any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction.
“You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.”
Here’s the link to the on-line version of Publication 502: https://www.irs.gov/publications/p502/index.html
If you want to download it: https://www.irs.gov/pub/irs-pdf/p502.pdf
So, you need to be able to prove that you meet this definition. A letter from a doctor will be a necessity here. Discuss all this with your own tax provider. Large medical expenses are a red flag for audit, so if you have other stuff in your tax return you don’t want them asking questions about, then you’ll want to think twice about taking this deduction.
I hope this helps!