In-depth Report on Medical Expense Deductions and the IRS Code

This report provides a comprehensive overview of medical expense deductions under the Internal Revenue Code (IRC). It details the types of medical expenses that are deductible, including acupuncture, artificial teeth, equipment related to contact lenses, and treatments for drug addiction and smoking cessation. It also outlines non-deductible expenses, such as non-prescribed drugs and cosmetic procedures. The report explains how to claim the deduction using IRS form 1040, Schedule A, and discusses the adjusted gross income threshold. Furthermore, it delves into revenue rulings and court decisions related to medical expense deductions, emphasizing the importance of adhering to IRS guidelines. The research concludes that while only certain expenses are deductible, understanding IRS rulings is crucial for taxpayers to make informed decisions and ensure compliance with tax regulations. Desklib offers similar solved assignments and study resources for students.

Running Head: MEDICAL EXPENSE DEDUCTION AND IRS CODE
Tax Research
Medical Expense
Deductions & IRS
Code

MEDICAL EXPENSE DEDUCTION AND IRS CODE 1
Table of Contents
Introduction................................................................................................................................2
Breaking down the deduction values.........................................................................................2
Deductions available for medical expenses...............................................................................3
Non-deductible Expense............................................................................................................3
How to claim deduction.............................................................................................................3
Revenue rulings..........................................................................................................................4
Regulations and court decisions.................................................................................................5
Conclusion..................................................................................................................................5
Bibliography...............................................................................................................................6

MEDICAL EXPENSE DEDUCTION AND IRS CODE 2
Introduction
The term medical expense means any costs which involves the prevention or
treatment of injury or disease. Medical expenses can be categorised as visit to a doctor, dental
insurance to be paid quarterly, payments for prescription and necessary drugs, wheelchairs
and glasses to name a few. There are certain medical expenses that are not compensated and
are deductible within certain limits. The Internal Revenue Code (IRC) on the other hand is
one of the U.S. code determined by Title 26, ‘the official coupling and codification of the
general and perpetual laws and regulations of the United States," which covers all significant
provisions regarding taxes like income, estate, payroll, sales, gift and custom and excise
taxes. The law was imposed by the internal revenue service (IRS) in 1926 by ‘House of
Representatives’ (Adams, Lee, Bhargava & Super, 2017).
Breaking down the deduction values
The IRS allows a qualified deduction for medical expenses which is calculated over
adjusted gross income. Adjusted gross income is calculated as
Adjustments can be loan for a student, interest repayment, premiums, contributions
like charity and many others. When the medical expenses overshoots by 7.5 % of the income
the deduction can be claimed for the period of 2017 and 2018 financial year. Further, from
2019 only the total uncompensated permissible medical expenses can be deducted which
shall be 10% more of the adjusted income.
Taxable Income- Adjustments

MEDICAL EXPENSE DEDUCTION AND IRS CODE 3
Deductions available for medical expenses
There are certain expenses which are permissible for deduction by IRS which are
discussed below.
Acupuncture and artificial teeth and limbs, equipment related to contact lenses and
materials, meals and lodging of alcoholic patients, congenital abnormality and deformity,
general physician expenditure, extra rent for nurses and their space, travel and transportation
charges, parking facilities (Hall, Orentlicher, Bobinski, Bagley & Cohen, 2018). X-ray
services and drug addiction treatment, including in-patient treatment, meals and lodging at a
therapeutic centre for drug addiction, oxygen and air equipment, lodging facilities while away
from home or household facilities when cannot afford the hospital treatment, weight loss
programme and ailments, eye surgery and hospital care treatment and the tests in the labs,
smoking treatment and medicines for programme and registration fees, medical aids like
prescription, eye glasses, braces, knee caps, hearing machines and contact lenses (Owens,
2018).
Non-deductible Expense
The expenses for which the compensation is already claimed will not be permissible
for deduction. IRS generally disallows certain expenses which can be drugs which are not
prescribed such as nicotine products, medical expenses due for different year, toothpaste,
vitamins or dietary supplements, cosmetic procedures (Giraud & Petit, 2017).
How to claim deduction
The deduction can be availed only if the medical expenses are itemized. The medical
expenses cannot account for standard deduction; it can be availed or compensated only if the
itemized deductions exceed the normal deduction. An IRS form 1040 is used to file the

MEDICAL EXPENSE DEDUCTION AND IRS CODE 4
medical taxes (Clarke & Kopczuk, 2017). This form is attached in schedule A. the medical
expenses will be reported of the entire year in line number 1 and adjusted income will be
recorded on line number 2. The deduction of 7.5% of the adjusted gross income shall be
calculated on line 3. The difference will be calculated from the current expenses and the
amount that exceeded by 7.5%. This amount will be deducted from the adjusted gross income
to reduce the income which is taxable. A combination of both the deducted amounts is
calculated and in addition to that the standard deduction if any is subtracted from the normal
deductions for the expenses which cannot be itemized (McPherson & Pincus, 2017).
A temporary exemption is also available for the people age 65 and above. This
exemption is also beneficial if one of the spouses is of 65 years, the deduction can be availed
on 7.5% of gross income.
Revenue rulings
There are various issues addressed by the revenue rulings which are issues of the
individual tax payers, suggestions and recommendations from group of practitioners
professional and technical advice to offices located in the district, court proceedings and
decisions, substantive tax law and so on. It is a decree issued by the IRS and considered as an
official statement of law given by the Commissioner. Not much weightage is given by the
court for the revenue rulings and it is generally considered as the view of the Commissioner.
Generally the tax payers count upon the published revenue for determining the tax treatment
of the transactions which arise due to similar transactions, situations and circumstances. The
revenue rulings are considered as the reliable resources and guidelines to compare their own
returns along with returns of the clients. Any ignorance of the stipulated guidelines is
subjected to the payment of the additional tax liability and further disciplinary action and
proceedings.

MEDICAL EXPENSE DEDUCTION AND IRS CODE 5
Court decisions and its Regulation
Internal Revenue Services (IRS) ensures that the provisions under the Internal
Revenue Code (IRC) are followed accordingly. Three type of decisions are issued by the
court of the United States under Internal Revenue Code which can be categorised as Regular,
Memorandum and Summary decisions (Berk-Seligson, 2017). A regular decision is basically
taken for the issues which are not previously discussed by the court or not considered. These
decisions area generally accepted as memorandum decisions later on. It can also be found
that IRS notifies or issues acquiescence under the small case procedures the summary
decisions are taken into consideration. Memorandum decisions are issued when the case is
primarily concerned with the prevailing law and facts of regulations. If issues are addressed
both the memorandum and regular decisions are taken into the consideration. Summary
decisions are issued in cases tried under the small case procedures and have no precedential
value (Single & Rosner, 2017).
Conclusion
From the above research on medical expenses and IRS rulings it can be concluded
that there are only certain expenses which can be deductible and account for deduction. The
Internal Revenue Service is the formal federal tax law in the United States will eventually
notify to the individual tax payers about the decisions regarding medical claims. The tax
payers can rely upon the IRS rulings as it is the most reliable source to compare the returns
from the existing clients. It enables them to take the decisions and makes it easy for
understanding the taxation structure regarding the medical claims.

MEDICAL EXPENSE DEDUCTION AND IRS CODE 6
Bibliography
Adams, G. B., Lee, J. S., Bhargava, V., & Super, D. A. (2017). Offsetting the Effects of
Medical Expenses on Older Adults’ Household Food Budgets: An Analysis of the
Standard Medical Expense Deduction. The Gerontologist, 57(2), 359-366.
Berk-Seligson, S. (2017). The bilingual courtroom: Court interpreters in the judicial process.
Chicago: University of Chicago Press.
Clarke, C., & Kopczuk, W. (2017). Business Income and Business Taxation in the United
States Since the 1950s. Tax Policy and the Economy, 31(1), 121-159.
Giraud, A., & Petit, S. (2017). Tax Rulings and State Aid Qualification: Should Reality
Matter. Eur. St. Aid LQ, 233.
Hall, M. A., Orentlicher, D., Bobinski, M. A., Bagley, N., & Cohen, I. G. (2018). Health care
law and ethics. Netherlands: Wolters Kluwer Law & Business.
McPherson, R. A., & Pincus, M. R. (2017). Henry's Clinical Diagnosis and Management by
Laboratory Methods E-Book. New York: Elsevier Health Sciences.
Owens, D. C. (2018). Medical Bondage: Race, Gender, and the Origins of American
Gynecology. Georgia: University of Georgia Press.
Single, L., & Rosner, S. (2017). Tax Confusion and Form 1040 Turmoil. Issues in
Accounting Education, 32(4), 19-24.