Recent tax reform resulted in an increase in the standardized reduction. As a result, taxpayers need to carefully review potential deductions before deciding if itemization is in their best interest. One item taxpayers may not take into consideration which could result in deductions: health aids.
Health care costs are a significant portion of the average American’s annual expenses and much of these costs are eligible for tax deductions. An analysis by the AARP Public Policy Institute found almost 9 million Americans take tax deductions on their federal tax returns for medical expenses. Since then, the development of health aids has boomed. As a result, the ability to deduct the cost of items like health aids could translate to significant tax savings.
What types of health aids are eligible for a tax deduction?
The Internal Revenue Service (IRS) recently provided some guidance on what health aids could qualify for tax deductions. The discussion began with a review of genetic testing kits. According to the agency, the kits can qualify for a tax deduction. However, the agency was quick to point out that there are limitations. The entire cost of the kit is not deductible. Instead, taxpayers can only deduct a portion of the cost.
What portion is deductible?
According to the agency, the portion of the kit that “qualifies as medical care” is deductible. One of the genetic testing kit companies has stated the agency allowed a tax deduction for up to $117.74 of the total $199 cost.
Why is this important?
The agency’s ruling could have larger implications for health aids. A recent piece in Forbes notes other health aid manufacturers are pushing for their products to receive a deduction. Examples include smart watches that monitor the user’s heart rate and provide other health benefits should qualify for a deduction as well.