[originally published in KCN, Arpil 2000]
Wow, chiropractic sure helped you out last year! It helped you overcome and manage that crippling back pain you’d been battling for years. It did wonders for your spouse’s chronic headaches, not to mention how it set things straight when your daughter took a tumble off the jungle gym. Oh, and let’s not forget, how it soothed your newborn’s cringing bout of colic. With such a great track record for ‘99, do you think it can offer any relief for that pain that’s persistently been getting worse since the year ended? You know, the one that has April 15th written all over it.
While there’s something to be said about how chiropractic can help relieve the negative effects that this stressful time of the year can have on our bodies, the kind of relief that I am suggesting is more along the lines of “tax relief.”
“What!?” you say. “I can deduct chiropractic care on my taxes??” The answer, I’m excited to say, is “Yes.” — BUT (there’s always one of those) whether or not it will actually count as a bona fide deduction for your situation depends on some important factors.
Wanting to shed more light on the subject for my patients and readers, but realizing that my strong suit is in adjusting bones and not numbers, I hopped on the Internet (www.irs.gov) and then called my Certified Public Accountant, Graham Pierson, out in Poulsbo. I figured that between the virtual “Candy Land” of information in cyberspace and Graham’s 29 years of experience in the tax field, I just might be able to get some answers — some answers that quite possibly might allow me to catch a glimpse into the inner workings of Uncle Sam’s mind when it comes to health care tax deductions.
So what did I learn? I learned that our chummy uncle will gladly allow you a tax deduction on those well-spent fees you and your family paid to your chiropractor last year. And because he’s such a nice guy, he’ll even pitch in a dime for every mile you had to drive to make it to your chiro’s office. Of course, if you had to take a cab, bus, or ferry on your journey, be sure to let him know, because that too is allowed as a writeoff. Oh, and those premium dollars you pay every month to your insurance company for your awesome chiropractic benefits, you can write those off as well. “Wow this is great!” you must be thinking. I know. It’s almost as if chiropractic just went on “sale.”
But, as I cautioned before, there are a couple of “fine print”, minor details I need to tell you about: for Sam’s “Chiropractic Sale” has some restrictions and exclusions. The first is whether or not you want to “itemize” your deductions. That is, actually listing on Form 1040, Schedule A, all amounts you paid last year for certain qualifying items such as chiropractic (and other health care), state and local income taxes, real estate taxes, home mortgage interest, job expenses, casualty and theft losses, and gifts to charity. Once you’ve tallied your list, your decision to itemize, or not, will pretty much hinge on how it looks when compared to the standard deduction that Uncle Sam has offered to give you without all the paper work ($7,200 for married folks under 65, $4,300 for single). If your total surpasses the boilerplate amount that Sam is offering, itemizing might make a lot of sense (cents?).
Supposing that you clear the first hurdle with Schedule A in hand, be forewarned as you dash forward, not everyone will make it to the grand “Chiropractic Sale.” For the IRS will only allow you to deduct health care expenses that are above and beyond 7.5% of your Adjusted Gross Income (that’s the amount listed on line 34 of your Form 1040). Depending on what your number is on line 34, that could certainly be a lot of chiropractic care! Fortunately, Uncle Sam has an open mind when it comes to health care, for he’ll allow you to include many other forms of care, like medicine and dentistry, into your total.
As a matter of fact, after talking with Graham and perusing through Publication 502, a 19-page IRS handout on the subject, there are many potential writeoffs that fall under the health care umbrella. Any amount you pay for the “diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body” can theoretically be deducted. But, the government warns, “the expenses must be primarily to alleviate or prevent a physical or mental defect or illness.” Sam says, “No!” when it comes to expenses related to face lifts and mentally relaxing vacations.
So assuming that you’re itemizing and have shelled out enough health care dough to overcome that 7.5% barrier, you can then treat any additional health care expenses as though they’re on “sale.” Because for every additional dollar you spend towards health care, your taxable income will be reduced by one. Depending on your tax bracket, this “sale” could translate, in a roundabout way, to a 15, 28, 30, or perhaps, 40% reduction in these additional expenses.
Items that you can include in your health care deductions run the gamut. Besides the areas I’ve already touched on, expenses paid out to acupuncturists, optometrists, osteopaths, psychologists, podiatrists, naturopaths, and physical therapists may also qualify as deductions — even expenses paid to Christian Science practitioners or American Indian medicine men can be considered. Contact lenses, eyeglasses, hearing aides, prescribed medications, wheel chairs, crutches, guide dogs, and false teeth are all on the list, as is lab, x-ray, and ambulance fees. Alcohol, stop-smoking, and drug treatment programs are also listed. Stays in hospitals and nursing homes for medical care qualify, as does enrollment in a special school or tutoring program for a severe learning disability. If you need to travel, for example, out of state, to see a doctor, not only will the transportation costs be deductible, but so will your lodging (up to $50 per night); and if it’s necessary for you to have someone travel with you, his or her transportation and lodging can be written-off as well. Payments of premiums for health insurance (which includes Medicare Part B) and an age-dependent portion of long-term care insurance premiums can be deducted. You may even include as a health care expense amounts you pay for special equipment installed in your home (minus any appreciation in your home’s value because of it), as long as their main purpose is health care. And if that equipment, such as a therapy pool, requires regular upkeep, that too can be included as a deduction.
As you can see from the examples above, the items that can qualify as health care deductions are numerous, and I was only able to scratch the surface on the topic — good thing, because I’m not a C.P.A., but a D.C. My goal in writing this particular article is not to dispense tax advice — that’s for the tax professionals — but to raise the level of awareness on the issue, and, hopefully, deliver some timely information that may prove to be quite helpful for some. One bit of advice that I can give, because it applies in my field, is to make sure you have strong record keeping. If you choose to itemize your health care deductions, your records should back it up. The IRS states that “you must keep a record of the name and address of each person you paid, and the amount and date of the payment. When requested… you must be able to substantiate your medical deduction with a statement or itemized invoice from the person or entity you paid showing the nature of the expenses, for whom it was incurred, the amount paid, the date of payment, and any other information the IRS may deem necessary.”
Just as I do not recommend do-it-yourself chiropractic, if your taxes involve more than a few pieces of paper, this is another area where “doing-it-yourself” can get dangerous — or at least highly frustrating. I’ve found that with a professional, such as a C.P.A., preparing my taxes, I actually benefit more than if I went at it on my own. Not only am I saving an incredible amount of time, but because they are able to keep their fingers on the pulse of the ever-changing tax laws, they can help me seize opportunities I never would have known existed — that alone usually covers their fee.
So, about that pain that’s been developing since ‘99 came to a halt. You know, the one that has April 15th written all over it. My recommendation is that you alleviate it immediately by dropping your taxes off at your local C.P.A. and dropping your body off at your local D.C. Not only will you begin to feel better immediately, but both of their services are deductible.