IRS Overview – The Deduction of Medical Travel Expenses

Filing your personal income taxes each year in America can create a headache warranting its own medical care. Fortunately, Uncle Sam has created some pain relievers you can use that may reduce the amount you owe for healthcare received overseas.

Certain expenses incurred in traveling for medical purposes are deductible for U.S. federal income tax purposes. Internal Revenue Code Section 262(a) generally prohibits the deduction of personal or living expenses unless specifically allowed by the Code. Section 213 allows a deduction for expenses paid for medical care, to the extent that such expenses exceed 7.5 percent of adjusted gross income. Therefore, you may deduct the cost for certain types of medical procedures obtained overseas.

Medical care is defined, in part, as amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, and for transportation primarily for and essential to medical care. A deduction is allowed for up to $50 per person for each night for lodging while away from home primarily for and essential to medical care if such care is provided by a physician in a licensed hospital (or in a medical care facility which is equivalent to a licensed hospital), and there is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Therefore, it is possible that the $50 per person deduction may be used for funds paid for room and board at a hospital or medical care clinic while obtaining healthcare overseas.

A deduction is also allowed for transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone. Section 213 specifically excludes a deduction for cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease.

When combining travel for medical purposes with tourism, determining the amount of the deductible portion can be problematic. When reviewing a taxpayer’s return claiming such deductions, the Internal Revenue Service will look at expenditures first as non- deductible personal expenses and allow only specifically documented medical expenses. It is therefore important to first obtain a doctor’s written statement stating the medical purpose of the trip and the necessity of the travel companion, if applicable. All documented transportation to and from the medical destination, allowable lodging expenses during treatment and recovery, and hospital and physician costs would then be deductible. Any additional costs of a vacation or pleasure nature would not be deductible.

Raymond V. Stephano, CPA, CFS, Principle and Founder of Stephano Financial Management. Raymond has over 30 years experience in financial and tax management. He is a graduate of Villanova University and his background includes serving as Treasurer and Chief Financial Officer for several companies. In 1991 he became an independent tax consultant and in 1993, he started Stephano Financial Management, an independent financial service organization.