Class VIII Chapter 10 Deductions and Losses - Class VIII...

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Class VIII Chapter 10 Deductions and Losses: Certain Itemized DeductionsRead all sectionsSection 10-1 Medical ExpensesMedical expenses paid for the care of the taxpayer, spouse, and dependents are allowed as anitemized deduction to the extent the expenses are not reimbursed.The medical expense deduction is limited to the amount by which such expenses exceed a thresholdpercentage of the taxpayer’s AGI.Under current law, the threshold percentage is 10 percent for most taxpayers.For taxpayers age 65 and older, however, the threshold is 7.5 percent of AGI until 2017, when itincreases to 10 percent10-1a Medical Expenses DefinedThe term medical care includes expenditures incurred for the “diagnosis, cure, mitigation, treatment, orprevention of disease, or for the purpose of affecting any structure or function of the body.”A medical expense does not have to relate to a particular ailment to be deductible. Because thedefinition of medical care is broad enough to cover preventive measures, the cost of periodic physical anddental exams qualifies even for a taxpayer in good health.Amounts paid for unnecessary cosmetic surgery are not deductible medical expenses. However, ifcosmetic surgery is deemed necessary, it is deductible as a medical expenseCosmetic surgery is necessary when it improves the effects of (1) a deformity arising from a congenitalabnormality, (2) a personal injury, or (3) a disfiguring disease.
The cost of care in a nursing home or home for the aged, including meals and lodging, can be includedin deductible medical expenses if the primary reason for being in the home is to get medical care.If the primary reason for being there is personal, any costs for medical or nursing care can be includedin deductible medical expenses, but the cost of meals and lodging must be excluded.Tuition expenses of a dependent at a special school may be deductible as a medical expense.The cost of medical care can include the expenses of a special school for a mentally or physicallyhandicapped individual.The deduction is allowed if a principal reason for sending the individual to the school is the school’sspecial resources for alleviating the infirmities. In this case, the cost of meals and lodging, in addition to thetuition, is a proper medical expense deductionThis example shows that the recommendation of a physician does not automatically make theexpenditure deductible.10-1b Capital Expenditures for Medical PurposesWhen capital expenditures are incurred for medical purposes, they must be deemed medically necessaryby a physician, the facility must be used primarily by the patient alone, and the expense must be reasonableExamples of such expenditures include dust elimination systems, elevators, and vans specially designedfor wheelchair-bound taxpayers.Other examples of expenditures that may qualify are swimming pools if the taxpayer does not haveaccess to a neighborhood pool and air conditioners if they do not become permanent improvements

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