Tax Write-Offs

[Lillyth]

I consulted with my accountant, and he said that after we spend 10% of our income on medical treatment, the rest is tax deductible. So save your receipts for EVERYTHING you do abroad (obviously not things like museums and such, but food etc., since the argument could be made that you cannot cook your own meals while you are there).

Oh, and a doctor's note couldn't hurt.

Essentially, for something like this, they can't deny you because, clearly, it is necessary. Plastic surgery? Not so much.

[annapurna]

I believe it's 7.5% of your adjusted gross income that is the threshold to deduct medical. You also have to watch what you can deduct. Hotels are $50 per night if I remember correctly, regardless of what you spent. Travel for a companion wasn't deductible unless that person had medical training and was necessary for your care. Basically, save every receipt and sit down towards the end of the year to figure out what you can deduct. Also, a huge deduction makes an audit more likely so be careful to document everything, including the benefits of traveling to see your chosen surgeon.

[JeffR]

Also don't know if this is relevant for U.S. taxes, but it is for Canadian:

You can claim the expense in any calendar year as long as one of the dates falls in the tax year, e.g. you can claim July 2011-July 2012, rather than Jan 1 - Dec 31st 2012. This is really important if you have been off work due to medical reasons. For example, I am NOT claiming my surgery last tax year (even though that is when my surgery happened) since I didn't work, but because I am going back to work in a couple months I will claim it THIS tax year with the corresponding tax credit benefits.

-Jeff

[Lillyth]

Originally Posted by annapurna

I believe it's 7.5% of your adjusted gross income that is the threshold to deduct medical. You also have to watch what you can deduct. Hotels are $50 per night if I remember correctly, regardless of what you spent. Travel for a companion wasn't deductible unless that person had medical training and was necessary for your care. Basically, save every receipt and sit down towards the end of the year to figure out what you can deduct. Also, a huge deduction makes an audit more likely so be careful to document everything, including the benefits of traveling to see your chosen surgeon.

It *was* 7.5%. Beginning with this calendar year (2013), that amount went up to 10%, so I didn't bother posting that 7.5% number, as, from this point on, anyone reading this will be subject to the 10% tax rate.

In America, just to clarify, the tax year is the calendar year. As far as hotels and such go, I'm a lot less concerned about that than the cost of the surgery itself. Our tax guy estimated that our tax refund next year would exceed my husband's income! But that's because I am doing so many freaking levels at once. The likelihood of this kind of money being spent again on this forum is low, but just in case. PLUS, our accountant deals with the IRS for us if we do get audited. Gotta love H&R Block! I tell ya, man, $35.00 is a small price to pay for someone else to deal with the IRS if they dispute your 80k tax deduction (and that's just for the surgery alone, not any of the extra things like food and flights).

Also, my husband may not have medical training (actually he *does*, but it is Alternative Healing stuff), but I challenge anyone to tell someone getting SIX levels of their spine replaced that they don't need a support person on the trip. Of course, it is the government, so who knows. I will also be getting letters of medical necessity from all of my various doctors, so that should help too.

Oh, and, even 50 bucks a night for the hotel would be great to get back!

[NJ Gene]

Originally Posted by Lillyth

It *was* 7.5%. Beginning with this calendar year (2013), that amount went up to 10%, so I didn't bother posting that 7.5% number, as, from this point on, anyone reading this will be subject to the 10% tax rate.

In America, just to clarify, the tax year is the calendar year. As far as hotels and such go, I'm a lot less concerned about that than the cost of the surgery itself. Our tax guy estimated that our tax refund next year would exceed my husband's income! But that's because I am doing so many freaking levels at once. The likelihood of this kind of money being spent again on this forum is low, but just in case. PLUS, our accountant deals with the IRS for us if we do get audited. Gotta love H&R Block! I tell ya, man, $35.00 is a small price to pay for someone else to deal with the IRS if they dispute your 80k tax deduction (and that's just for the surgery alone, not any of the extra things like food and flights).

Also, my husband may not have medical training (actually he *does*, but it is Alternative Healing stuff), but I challenge anyone to tell someone getting SIX levels of their spine replaced that they don't need a support person on the trip. Of course, it is the government, so who knows. I will also be getting letters of medical necessity from all of my various doctors, so that should help too.

Oh, and, even 50 bucks a night for the hotel would be great to get back!

Lilly,

I am a C.P.A. Everything related to the trip is tax deductible to the extent it exceeds 10% of your adjusted gross income. In particular, your flights and hotel are, so you should take them. However, if you extend your trip by an extra week to take an additional vacation I would not recommend including that. The amount of hotel time recommended by your medical team is reasonable, in my opinion. Here's the good part. Because you are going to exceed 10% of your AGI with this surgery, you should include things at home that you normally wouldn't think of doing. Every single copay of every doctor's visit you make should be included. The same thing goes for medications. Any out-of-pocket costs (not reimbursed by insurance) can be added in. If you see a mental heath professional by some chance, they are usually not 100% covered. Include the out-of-pocket cost. Same goes for acupuncture. You could even deduct the cost of a massage if you have a doctor's note that says it's necessary. If you file a joint return, your husband can include all of his medical related expenses. Last but not least, don't forget to include any supplemental health or dental insurance in which you pay for the premiums out of pocket (and are not already deductible as a business expense).

[Lillyth]

Originally Posted by NJ Gene

Lilly,

I am a C.P.A. Everything related to the trip is tax deductible to the extent it exceeds 10% of your adjusted gross income. In particular, your flights and hotel are, so you should take them. However, if you extend your trip by an extra week to take an additional vacation I would not recommend including that. The amount of hotel time recommended by your medical team is reasonable, in my opinion. Here's the good part. Because you are going to exceed 10% of your AGI with this surgery, you should include things at home that you normally wouldn't think of doing. Every single copay of every doctor's visit you make should be included. The same thing goes for medications. Any out-of-pocket costs (not reimbursed by insurance) can be added in. If you see a mental heath professional by some chance, they are usually not 100% covered. Include the out-of-pocket cost. Same goes for acupuncture. You could even deduct the cost of a massage if you have a doctor's note that says it's necessary. If you file a joint return, your husband can include all of his medical related expenses. Last but not least, don't forget to include any supplemental health or dental insurance in which you pay for the premiums out of pocket (and are not already deductible as a business expense).

OMG!!!! You are a GODSEND!!! If you were in the room I would KISS you right now! Thank you, thank you, thank you!

We are staying two days beyond the seven included in the package, solely because it was $800.00 cheaper to fly out two days later.

This is the BEST NEWS EVER!

In case you couldn't tell, you just totally rocked my world.

[Lillyth]

What about meals while overseas? (Obviously nothing fancy).

[NJ Gene]

Originally Posted by Lillyth

What about meals while overseas? (Obviously nothing fancy).

I'm glad I could help!! If staying two extra days makes the entire package less because of a cheaper flight, I would deduct the entire amount. In the case of an audit, you (or your C.P.A.) can explain that to IRS agent. As far as meals go, according to IRS Publication 502, only those that are served in the hospital as part of in-patient care are deductible. Here is a link to that publication:
http://www.irs.gov/pub/irs-pdf/p502.pdf

[Lillyth]

You rock! Thank you!

[Lillyth]

I think I am going to be sick.

I just confirmed with my CPA that in fact, what this means is the we will get back ONLY what was withheld by the government, not the full amount of the surgery. In fact, it is a fraction of the total cost of the surgery, and net even enough to cover the loan we took out to pay for part of it. I am glad to be getting something back, rather than nothing, but going from thinking I was going to be getting it all back to this? Well, I feel like I want to puke.