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Canadians will find it interesting to see that the US only allows
medical expenses in excess of 7.5%
of the adjusted gross income (our line 236 net income line) and
there is no limit whereas the Canadian
system has a cap of 3% or $1,728 whichever is less. i.e. Canada
is better here.
Also one has to give up their standard deduction in the US to
claim medical and mortgage interest while in Canada
you can claim both in addition to your standard amounts if you
arrange your affairs properly.
david
IR-2003-66, May 15, 2003
WASHINGTON - In two rulings issued today, the Internal Revenue
Service
clarified the tax treatment of certain medical expenses. The
guidance
affects the ability of taxpayers to claim these expenses when
itemizing
deductions.
Taxpayers who itemize may claim medical expenses only to the
extent they
exceed 7.5 percent of adjusted gross income. Even though more
than
one-third of taxpayers itemize deductions, fewer than six percent
claim
medical expenses.
The rulings cover five subjects:
-- nonprescription drugs recommended by a doctor;
-- nonprescription equipment, supplies, or diagnostic devices;
-- breast reconstruction surgery;
-- vision correction surgery; and
-- teeth whitening procedures.
The law limits the deduction for medicine or drugs to insulin and
those
drugs that require a prescription. Even when recommended by a
doctor,
medicines available over-the-counter are not deductible. However,
this
limitation does not apply to other nonprescription items, such as
bandages, crutches, thermometers, or blood sugar test kits. If
otherwise
qualifying as related to medical care, such items are deductible.
The law does not allow a deduction for cosmetic surgery or
similar
procedures, unless needed to correct a deformity related to an
injury,
disease, or congenital abnormality, to meaningfully promote the
proper
function of the body, or to prevent or treat illness or disease.
Thus,
breast reconstruction after a mastectomy or vision correction by
laser
surgery would be deductible expenses. However, merely improving
appearance
is not enough for a procedure to qualify as deductible. Hence,
treatment
of tooth discoloration, which doesn't promote the proper function
of the
body and doesn't correct a deformity, is not a deductible medical
expense.
Revenue Rulings 2003-57, dealing with surgical procedures, and
2003-58,
dealing with nonprescription items, are available on the IRS Web
site at
www.irs.gov and will be published in Internal Revenue Bulletin
2003-22,
dated June 2, 2003.
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david ingram - [email protected]
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
Be ALERT, the world needs more "lerts"
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