Medical deduction or not

[AuditorTurnedGood]

Thansk for the heads up

Please note, by the way, that the 2009 phaseouts have been raised way up, by the "American Opportunity" (Education) Tax Credit put into the economic stimulus law, to phaseout from $80K to $90K for single and from $160K to $180K for MFJ.

I saw this over the weekend when I was running a projection for a client. Thanks for keeping us in the loop!

ATG

[Burke]

"The fees paid to a dependent's educational institution generally include a fee for insurance and medical care. The applicable part is deductible as a part of medical expenses." CCH 1040 Express, page 2-7.

[FEDUKE404]

Discussion does NOT involve tax credits...

Student medical expenses, including health fees, cannot be used for the educational credits. (Pub 17, page 235)

Publ. 17 goes on to say "this is true even if the fees must be paid to the institution as a condition of enrollment or attendance".

Please note that the original question in my first post was whether the "health services fees" could be considered as an allowable Schedule A medical deduction.

(Due to income levels, the client is NOT eligible for any education tax credits based upon tuition costs and required fees, regardless of whatever portion of those required fees would be allowable for the determination of any such tax credits.)

Perhaps I did not state my initial question quite clearly enough??

I do think the answer by Bees Knees is worthy of consideration, although the phrase "health plan" might present an obstacle.

FE

[OtisMozzetti]

phsseouts raised way up

...
I would imagine that AGI-ing out of the education credits (Either at 116K for MFJ or 58K for single, using 2008 phaseouts) would defacto kill the $400 deduction.
...

Please note, by the way, that the 2009 phaseouts have been raised way up, by the "American Opportunity" (Education) Tax Credit put into the economic stimulus law, to phaseout from $80K to $90K for single and from $160K to $180K for MFJ.

[OtisMozzetti]

Student medical expenses, including health fees, cannot be used for the educational credits. (Pub 17, page 235)

Publ. 17 goes on to say "this is true even if the fees must be paid to the institution as a condition of enrollment or attendance".

[JohnH]

Try preparing a return for someone who's a private-pay patient in a skilled nursing facilility or Alzheimers unit. In those cases you're usually dealing with $60K/year at a minimum. Even qualifying assisted living will usually start at around $40K/year.

[AuditorTurnedGood]

That's

the most medical I think I've seem!

ATG

[FEDUKE404]

Sch A floor

Point taken. However, I assumed we were discussing taking the health fee as a Sch A Medical Expense on the return of the parents. Unless they have a bail of other medical expenses to throw at the pile, I would imagine that AGI-ing out of the education credits (Either at 116K for MFJ or 58K for single, using 2008 phaseouts) would defacto kill the $400 deduction.

I could be missing something - it happens plenty on the off season.

Individual has >$30k of allowable medical deductions above the 7.5% AGI floor.

And my own off-season brain patooies (sp?) also seem to be of a similar nature!

FE

[AuditorTurnedGood]

The total "health services fees" deduction for the taxpayer is in the range of $400, which probably would save at least a Benjamin Franklin or so for the taxpayer, taking into account federal and state taxes.FE

Point taken. However, I assumed we were discussing taking the health fee as a Sch A Medical Expense on the return of the parents. Unless they have a bail of other medical expenses to throw at the pile, I would imagine that AGI-ing out of the education credits (Either at 116K for MFJ or 58K for single, using 2008 phaseouts) would defacto kill the $400 deduction.

I could be missing something - it happens plenty on the off season.

[FEDUKE404]

Other medical expenses

is such that it eliminates eligibility for education tax credits, is it safe to say the same AGI would eliminate the deduction on Schedule A for what I would assume is a fairly modest fee when you apply the 7.5% floor?

ATG

That is not a good assumption. While the 7.5% floor amount is high, there are still plenty of allowable deductions remaining.

The total "health services fees" deduction for the taxpayer is in the range of $400, which probably would save at least a Benjamin Franklin or so for the taxpayer, taking into account federal and state taxes.

FE

[FEDUKE404]

Tax credit explanation

Student medical expenses, including health fees, cannot be used for the educational credits. (Pub 17, page 235)

You are correct on that issue.

However, having endured way too many Forms 1098-T with meaningless numbers on them, finding the bits and pieces of "bundled fees" can be quite troublesome. Toss in the academic year for the expenses and the calendar year for the scholarships, and you are frequently comparing apples/oranges/coconuts. But that topic has been beaten to death previously on these boards.

And in this case, there are plenty of remaining allowable education expenses that could in theory have been used absent the taxpayer income levels.

FE

[Bees Knees]

IRS Pub 502, page 14:

Tuition

Under special circumstances, you can include charges for
tuition in medical expenses. See Special Education, earlier.

You can include charges for a health plan included in a
lump-sum tuition fee if the charges are separately stated or
can easily be obtained from the school.

In my opinion, if the student is required to pay a "health services fee" as part of the cost of tuition, the fee is a lump-sum tuition fee for a health plan (the right to use the health facilities at the school in case of illness or accident).

Thus the fee is deductible as a medical expense.

[DonPriebe]

Cannot be educational expenses

Student medical expenses, including health fees, cannot be used for the educational credits. (Pub 17, page 235)

[AuditorTurnedGood]

If the income of the parents

is such that it eliminates eligibility for education tax credits, is it safe to say the same AGI would eliminate the deduction on Schedule A for what I would assume is a fairly modest fee when you apply the 7.5% floor?

ATG

[S T]

My Thoughts

I haven't researched a lot on the issue but if your taxpayer can qualify for medical, since the health service fee which is a requirement from the College and it does offer some type of "health/medical service" then I would think it would be a deductible Medical Expense.

Just my opinion and no cite to offer

Sandy