Details for an Enrolled Agent Tax Preparer to Know About Deductible Medical Expenses

July 22, 2011 by  Filed under: Taxes 

Taxpayers with medical expenses who receive assistance from a professional with enrolled agent certification learn that a tax deduction is only available for incurring alot of out-of-pocket medical costs. The deductible part of these expenditures is limited to the amount exceeding 7.5 percent of adjusted gross income. That is usually quite a threshold to hurdle, but not impossible.

In fact, many people who had a prolonged illness missed work and thus have a reduced income. When their medical expenses approach the 7.5 percent barrier, it is time for an enrolled agent tax preparer to dig for all medical deductions. By adding common medical expenditures that normally total less than 7.5 percent of AGI to the nonrecurring cost of a single illness, taxpayers are often able to pass the AGI threshold.

Knowing what items count toward deductible medical expenses is covered in an initial enrolled agent study guide. Over-the-counter medication and first aid do not qualify. However, dental charges, eyeglasses, and a lot of other categories do comprise part of deductible medical costs.

An increasing popular category from which medical expense deductions arise is weight loss programs. All that is required is confirmation from a physician that a taxpayer’s current weight is a health threat. Beginning in 2002, the medical community began classifying obesity as an ailment akin to high blood pressure or high cholesterol.

Any type of weight loss program qualifies as a deductible medical expense if there is a written doctor order to enroll. This often involves a program at a local clinic or hospital. However, national commercial programs also count – such as Weight Watchers or Jenny Craig.

Expenditures that are not qualified medical expenses are memberships in health clubs, gyms, or spas. Also excluded are diet foods, nutritional supplements, and exercise equipment. These costs are considered merely beneficial to general health…and anything in that category is not tax-deductible. In addition, procedures such as liposuction are primarily cosmetic in nature and therefore not medical deductions. All of these categories are noted as exclusions from total of deductible medical expenses on an enrolled agent practice test.

Fees for actual counseling are deductible. So, costs for dieticians and nutritionists that a doctor recommends are important for taxpayers to record. Also, weight loss drugs with FDA approval are deductible because they relate to alleviating a medical condition. The same standard applies to Bariatric surgery, thus making it tax-deductible

In fact, the cost for a major medically supervised weight loss program can easily approach several thousand dollars. This makes a taxpayer more likely to surpass the 7.5 percent AGI threshold. Therefore, enrolled agent jobs always involve asking tax clients about outlays for any program that may qualify as a medical expense deduction.

There is also a standard mileage rate applied to medical miles driven. This determines a medical-related auto expense deduction. So, taxpayers should track the miles for frequent trips related to medical purposes – even to meetings for weight loss counseling.

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.

Fast Forward Academy is a leading publisher of education for enrolled agent certification and tax professionals. Access to free questions for the enrolled agent tax preparer is available on their website.

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