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Author Topic: USA: Tax Write Off for Cosmetic LL?  (Read 2718 times)

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Purushrottam

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USA: Tax Write Off for Cosmetic LL?
« on: April 11, 2018, 03:41:32 PM »

Title says it all. I'm doing my taxes right now. I haven't started doing my research yet so excuse my rather ignorant question. Have any of you written off the costs of Cosmetic LL in your taxes?
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #1 on: April 11, 2018, 03:44:07 PM »

I suppose this link answers my question:

https://turbotax.intuit.com/tax-tips/health-care/can-i-claim-medical-expenses-on-my-taxes/L1htkVqq9

What's not deductible?

Any medical expenses for which you are reimbursed, such as by your insurance or employer, cannot be deducted. In addition, the IRS generally disallows expenses for cosmetic procedures. You cannot deduct the cost of non-prescription drugs (except insulin) or other purchases for general health such as toothpaste, health club dues, vitamins or diet food, non-prescription nicotine products or medical expenses paid in a different year.
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #2 on: April 11, 2018, 03:47:08 PM »

I think I can still deduct the cost of the prescription drugs (Xaralto $440 X 3) and maybe some travel related expenses.
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Android

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #3 on: April 11, 2018, 06:17:43 PM »

Have you asked a staff member at Paley Institute? They might have answers.
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5'4" and 1/4" (163.2 cm) | United States | early 30s | Cross-lengthening with Dr. Solomin & Dr. Kulesh

Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #4 on: April 11, 2018, 06:52:33 PM »

Have you asked a staff member at Paley Institute? They might have answers.

I just called them upon your suggestion. They don't know. They suggested that I contact a tax expert. You can deduct medical expenses if they exceed 7.5% of your income.

If I just deduct my medications, it won't exceed the 7.5% figure. If I include my travel expenses (ie. flight to WPB, Hotel in WPB, etc), then I will exceed that figure. Its a significant chunk of change so it might be worth considering.

Furthermore, if you can itemize the surgery (which is cosmetic) and the X-Rays, and the physical therapy, you might be able to write the latter two off.
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #5 on: April 11, 2018, 07:55:27 PM »

I called the billing department. They can't itemize the $90,000 cost into Surgery, X Rays, Physical Therapy, etc. I was hoping that if cosmetic surgery was not covered, then the associated physical therapy might be. I'm still going to try calling a tax expert on this.

If I can do this, I might be able to exempt about $15,000 in LL related expenses. I just want to verify that everything that I'm doing is 100% legal and tax compliant.

Source:
Expenses that CAN be written off:

https://www.irs.gov/publications/p502#en_US_2017_publink1000178887

Expenses that CAN NOT be written off:

https://www.irs.gov/publications/p502#en_US_2017_publink1000179040
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #6 on: April 11, 2018, 08:52:34 PM »

Update:

I just spoke with the IRS. I can summarize it as:

You can write off the travel/prescription drug/physical therapy expense if:

"paid for diagnosis, cure, mitigation, treatment, or prevention of disease OR for the purposes of affecting any structure or function of the body"

"the hotel was not extravagant and not part of your recreational activity"

And of course, the expenses have to exceed 7.5% of your gross annual income. So I'm going to make the case that it is "paid for purposes of affecting any structure or function of the body" with physical therapy. PI does not itemize costs so it might be a bit iffy to estimate the cost of physical therapy. I'm going to use the therapists hourly billing rate for the estimate.

If I include the PT, then it exceeds the 7.5% gross annual income (thus can get deducted).


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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

Android

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #7 on: April 11, 2018, 09:46:05 PM »

Surprising that they didn't know after treating countless patients. Maybe that person just didn't know, maybe their accountant does... But at least you're going in the right direction.

It's strange that they can't itemize the bill. It's either they don't keep records or they just don't want to share the breakdown.

As they suggested, maybe you can find a CPA that specializes in medical care, preferably cosmetic too. Please keep us posted, this is helpful information for many of us.
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5'4" and 1/4" (163.2 cm) | United States | early 30s | Cross-lengthening with Dr. Solomin & Dr. Kulesh

FormerKidd

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #8 on: April 12, 2018, 12:50:19 AM »

Surprising that they didn't know after treating countless patients. Maybe that person just didn't know, maybe their accountant does... But at least you're going in the right direction.
I suspect they do not want to be in the business of advising people on tax issues.  Presumably they could be liable if they give incorrect advice.
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Purushrottam

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #9 on: April 12, 2018, 03:59:51 AM »

I suspect they do not want to be in the business of advising people on tax issues.  Presumably they could be liable if they give incorrect advice.

That makes sense. As backup, I'm going to pay extra ($179) to have CPAs from TurboTax review my tax return and represent me in the case of an audit. I also have the reference # from my phone call to the IRS where I asked about the ambiguities (whether or not the associated medical expenses of LL are covered).
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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #10 on: April 12, 2018, 05:33:39 AM »

Sensible decision, good stuff!
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5'4" and 1/4" (163.2 cm) | United States | early 30s | Cross-lengthening with Dr. Solomin & Dr. Kulesh

OverrideYourGenetics

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US tax write-off for CLL-related expenses
« Reply #11 on: November 15, 2019, 05:58:37 AM »

Looks like the links that Puru posted are no longer current, so here's copy/pasting from the law about what you can and can't try to itemize as a US tax deduction, from IRS Publication 502. Underlined emphasis mine.

Quote
Cosmetic Surgery

Generally, you can't include in medical expenses the amount you pay for cosmetic surgery. This includes any procedure that is directed at improving the patient's appearance and doesn't meaningfully promote the proper function of the body or prevent or treat illness or disease. You generally can't include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction.

You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

Hospital Services

You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. This includes amounts paid for meals and lodging.

Lodging

You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. [...]

You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.

  • The lodging is primarily for and essential to medical care.
  • The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
  • The lodging isn't lavish or extravagant under the circumstances.
  • There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.


The amount you include in medical expenses for lodging can't be more than $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals aren't included.

Don't include the cost of lodging while away from home for medical treatment if that treatment isn't received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging isn't primarily for or essential to the medical care received.

Trips

You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. You may be able to include up to $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals aren't included.

Transportation
You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care.

You can include:
 
  • Bus, taxi, train, or plane fares or ambulance service;
  • Transportation expenses of a parent who must go with a child who needs medical care;
  • 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


Crutches
You can include in medical expenses the amount you pay to buy or rent crutches.

Wheelchair
You can include in medical expenses the amounts you pay for a wheelchair used for the relief of a sickness or disability. The cost of operating and maintaining the wheelchair is also a medical expense.

Recordkeeping. You should keep records of your medical and dental expenses to support your deduction. Don't send these records with your paper return.


Now based solely on this text above from the IRS, I think it's risky to claim a tax deduction for lodging that was for cosmetic surgery. Yea, the "principal reason" you used the lodging was "to receive medical care", but that medical care was following a cosmetic procedure, and you can't include cosmetic procedures in your medical expenses. Imagine you're audited: "Yes Mr. IRS, I paid them to break my legs and make them longer, but after that I needed physical therapy, and I needed a hotel nearby too..."

I also have the reference # from my phone call to the IRS where I asked about the ambiguities (whether or not the associated medical expenses of LL are covered).

Puru, when you called the IRS, did you explicitly tell the agent that LL was a cosmetic procedure?

Also, did you write off trip-related expenses too, or just lodging?

And how about the removal surgery? That itself is the direct result of a cosmetic procedure, but on the other hand, can be classified as "removal of painful hardware" (diagnosis code 996.78) or "deep implant removal" (CPT code 20680). I'm not entirely clear about the first diagnosis code; I've heard about the latter, but the latter doesn't sound as medically necessary.

I called the billing department. They can't itemize the $90,000 cost into Surgery, X Rays, Physical Therapy, etc.

That sucks, but - there's a number of included PT sessions in the $90k cost. The Stature Lengthening FAQ mentions
Quote
How often will I have physical therapy?
Daily, 5 days a week for the entire distraction phase. (6 days a week may be available for an additional
payment of $225 per session-please inquire regarding this)

Physical Therapy includes:
• Daily (5 days per week) one hour of physical therapy at the Paley Institute outpatient rehab center (there is no PT on weekends); up to 12 weeks femurs and tibias (surcharge after 12 weeks); femur plus tibia overlapped up to 14 (surcharge after 14 weeks).

I remember I had 70 included sessions indeed, and did two extras, for which I paid $300 each in June 2018.
« Last Edit: November 15, 2019, 07:37:03 AM by OverrideYourGenetics »
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My diary. Tibias+femurs 3.75+3.75cm at the Paley Institute (5'5" -> 5'8") in my late 30s.
One of the last patients to use the PRECICE 2.2 nail. I met the first STRYDE patient and I strongly recommend the new STRYDE nail instead.

Montreal172

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #12 on: November 15, 2019, 07:42:22 PM »

Just find a medical condition pre-op that was fixed post-op.
Could be your posture, reduce chances of scoliosis, etc.
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Purushrottam

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Re: US tax write-off for CLL-related expenses
« Reply #13 on: November 16, 2019, 12:56:09 AM »


Puru, when you called the IRS, did you explicitly tell the agent that LL was a cosmetic procedure?


I don't remember. I think I did.


Also, did you write off trip-related expenses too, or just lodging?


The trip related expenses were insignificant compared to lodging + PT


And how about the removal surgery?


I almost forgot. Thanks for reminding me. I think I can classify it as "removal of  painful hardware".

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Had LL in Sept 2017 with Dr. Paley.
Starting height: 168.5 cm (5'6.5"); Ending height: 175 cm (5'9")
http://www.limblengtheningforum.com/index.php?topic=4823.0

OverrideYourGenetics

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USA medical tax deductions for leg lengthening
« Reply #14 on: October 01, 2020, 08:49:05 AM »

Hey Puru, any updates on your deducting LL expenses from your taxes?

I did a simulation in TurboTax, and if you declare the surgery itself as a deductible medical expense (e.g. if you have the appropriate diagnosis that's not just cosmetic), you can get back tens of thousands of dollars (!).

For example, for a tech salary of $120k/yr and living in California,
1) you don't pay ANY CA state tax on the income (sick pay) you've realized during the recovery. In my simulation, that was about $9k.
2) Then you get back federal taxes that were withheld from your paychecks. In my case that was $20k (!).

This happens because deducting the cost of the surgery ($90k - $175k) from your income reduces your remaining (taxable) income to almost zero.

The key is to have a diagnosis that necessitates the surgery not just for cosmetic reasons. Any updates on that? "Short stature due to endocrine disorder" might be one, or just "Short stature (child)", but this should be (re)checked with a tax professional. Did the IRS person you spoke with address deducting the surgery itself, if you had other issues, as Montreal172 suggested, e.g. limb length discrepancy?

Either way - because you've paid for lodging alone between $4500 ($50/night x 90 nights), and $9000 if a caretaker stayed with you the whole time, you're getting close to the minimum percentage of your AGI above which you can itemize medical expenses. Then you can deduct ANY OTHER MEDICAL EXPENSES you had in that year!

Anyway, would love to hear an update about deducting the removal surgery costs.
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My diary. Tibias+femurs 3.75+3.75cm at the Paley Institute (5'5" -> 5'8") in my late 30s.
One of the last patients to use the PRECICE 2.2 nail. I met the first STRYDE patient and I strongly recommend the new STRYDE nail instead.

BelowTheMean

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #15 on: October 01, 2020, 04:45:56 PM »

While the benefits are great, I feel like this is the exact kind of thing that would get audited :P
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OverrideYourGenetics

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #16 on: October 02, 2020, 08:24:52 AM »

While the benefits are great, I feel like this is the exact kind of thing that would get audited :P

Probably... though nowhere in my consolidated 300-page medical report from all 3 surgeries is the word "cosmetic" mentioned.

There's endocrine short stature, short stature disorder, constitutional short stature, limb length discrepancy then various other diagnoses during the recovery (abnormal gait, inflexibility etc.). I think it would take some non-trivial knowledge of this rare procedure and various associate medical details (e.g. what limb length discrepancy is pathological?) for a tax auditor to decide this is not deductible. I'll have to check with a tax preparer, and finding one with knowledge of somewhat similar precedents won't be easy. And I think they'd be heavily biased by however I present the problem. If I send them my medical report and ask, "Is this deductible", the answer will probably be Yes. If I say "I had COSMETIC leg lengthening, here's my medical report", they might say No.

In any case, I think the worst outcome is that the federal refund is reduced; the CA state refund should still be warranted, because it was due to sick pay, which was approved by my work's sick pay provider. The lodging costs should still be deductible (see Puru's post about him talking to an IRS employee), as well as various other expenses (e.g. PT). One extra PT session cost me $300, and the Paley Institute surgery package included 70 PT sessions, so that's $21k of value.
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My diary. Tibias+femurs 3.75+3.75cm at the Paley Institute (5'5" -> 5'8") in my late 30s.
One of the last patients to use the PRECICE 2.2 nail. I met the first STRYDE patient and I strongly recommend the new STRYDE nail instead.

ink

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #17 on: October 02, 2020, 09:15:09 AM »

Honest thoughts: America is a great country. There is no other country in the world which would let you safely lengthen your limbs. Precice and Stryde were invented here. They are manufactured here. The country has nurtured some of the best talent. Notice how so many expert LL surgeons were born outside of the USA. They came here to fulfil their dreams. And so many of us have been able to fulfil our dreams. Something that was so surreal to imagine is now possible. Quite safely under the care of American surgeons and hospital systems. Why not pay up some extra tax as gratitude? Especially if you're well off or foresee making good money.
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ghkid2019

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #18 on: October 02, 2020, 09:40:22 AM »

In that case u wud donate to the surgeon instead of contributing to the military industrial complex
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BelowTheMean

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #19 on: October 02, 2020, 05:17:11 PM »

Honest thoughts: America is a great country. There is no other country in the world which would let you safely lengthen your limbs. Precice and Stryde were invented here. They are manufactured here. The country has nurtured some of the best talent. Notice how so many expert LL surgeons were born outside of the USA. They came here to fulfil their dreams. And so many of us have been able to fulfil our dreams. Something that was so surreal to imagine is now possible. Quite safely under the care of American surgeons and hospital systems. Why not pay up some extra tax as gratitude? Especially if you're well off or foresee making good money.

Lmao what kind of first post is this? Are you some kind of shill for the IRS? Taxation is theft, regardless of what country you live in. Just because the government can take your money at gunpoint and then blow it on stupid   doesn't mean that's the way things should be. Considering how many rich people pay almost nothing in taxes, I don't think there are any moral arguments against deducing CLL from your taxes. It's not about whether you should or shouldn't do it, it's about whether or not you can get away with it.
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Stryde Femurs - Debiparshad - Nov 2020
169cm -> 177cm (goal)
http://www.limblengtheningforum.com/index.php?topic=65617

Current Status: Distraction Phase

Medium Drink Of Water

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #20 on: October 02, 2020, 05:27:43 PM »

The rich people who don't pay any taxes do so by saying everything they spend money on is a business expense, so that offsets the portion of their income that they have to pay taxes on.

You have to convince the IRS that getting cosmetic surgery is a business expense.  Maybe tell them taller people earn more money in all professions.  ;D
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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #21 on: October 02, 2020, 08:02:30 PM »

Lmao what kind of first post is this? Are you some kind of shill for the IRS? Taxation is theft, regardless of what country you live in. Just because the government can take your money at gunpoint and then blow it on stupid   doesn't mean that's the way things should be. Considering how many rich people pay almost nothing in taxes, I don't think there are any moral arguments against deducing CLL from your taxes. It's not about whether you should or shouldn't do it, it's about whether or not you can get away with it.

But how are we going to buy another F-35 stealth fighter jet for 1 trillion dollars? Don't you care about our vets? Our pilot vets? Do you have a soul? How are we going to bomb the shít out of Syria and Yemen then?
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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #22 on: October 02, 2020, 09:20:46 PM »

Attempting to evade or defeat paying taxes is a felony subject to all penalties allowed by law, including:  (1) imprisonment for no more than 5 years, (2) a fine of not more than $250,000 for individuals , or (3) both penalties, plus the cost of prosecution (26 USC 7201).

Apparently, you are obliged to pay some amount of income tax because you are employed.  You also seem to suggest that you have medical insurance through your employment.

Notwithstanding the above, you want to sell the IRS on the notion that you paid $90K - $175K for non-covered medical expenses BUT these expenses were NOT related to cosmetic surgery.

See any red flags?  Better be prepared to prove you had a really rotten health insurance plan.
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FormerKidd

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #23 on: October 04, 2020, 08:02:37 PM »

I actually briefly discussed this with a tax professional.

As others have said, cosmetic surgery is almost never deductible.  I say almost because there have been a few cases where it was permitted (e.g., "Chesty Love" -- https://www.huffpost.com/entry/tax-court-upholds-busines_b_5292707).  However, that doesn't help 99% of the people here.

If anyone is planning to attempt to take a deduction related to this, make sure you keep your paperwork for 3+ years and be prepared to defend it.  Just because your return is accepted does not mean you in the clear -- the average delay before an audit for certain areas was well over a year and this was pre-COVID.

Apparently, you are obliged to pay some amount of income tax because you are employed.

That's not really true.  If you work and make below the standard deduction ($12,400 for 2020) you actually no pay federal income tax.
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184dream

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #24 on: October 08, 2020, 08:38:15 PM »

Useful information
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184dream

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #25 on: October 08, 2020, 08:38:47 PM »

Useful information
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Montreal172

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #26 on: October 10, 2020, 04:15:22 PM »

1- Incorporate yourself
2- Open an HSA account
3- Transfer the expenses of surgery to your business.
4- 100% of your surgical expenses will be offset to reduce the taxes of your business.


IMO best way to do it. You can also show this to your CPA accountant and ask him.
It is a grey are because it is not a purely cosmetic surgery, you can make a case for height neurosis, gait problems,
so make sure you have proof of that beforehand in case of an audit.

Best of luck.
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California2

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #27 on: October 12, 2020, 06:16:10 PM »

An HSA does not really help.  An individual can contribute up to $3500 to an HSA IF AND ONLY IF that individual qualifies by having a high-deductible health insurance plan.

Doing so reduces taxable income by that same amount.  Consequently, if you are in (for example) a 20% tax bracket; then, you save $700 by using an HSA.

You cannot contribute $100K to an HSA. 

Likewise, you cannot  form a business entity; then, claim $100K in medical expenses as "business" expenses.  Businesses do not need medical care. 

Businesses can deduct some employee expenses such as the business' cost of employee benefits such as a healthcare plan.  However, you have to incur such expenses before you can deduct them.

Moreover, single person business entities are usually taxed as a pass-through entity--which means the tax structure is identical to the tax structure for an individual. 

If a single person business entity elects to be taxed as a corporation or LLC; then, that person risks paying tax twice--once on the income earned by the corporation/LLC, and again as an individual on the income paid to the individual by the corporation/LLC.

If you have a healthcare plan and cannot convince your healthcare plan that your surgery is medically necessary; then, you will be hard-pressed to convince the IRS that your surgery was medically necessary but not covered by your healthcare insurer. 

You will be arguing that you have really rotten healthcare insurance.
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FormerKidd

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Re: USA: Tax Write Off for Cosmetic LL?
« Reply #28 on: October 13, 2020, 04:44:25 AM »

Yeah, the business thing is bogus advice.  It would not stand up in court unless you had a pre-existing business and could prove the surgery materially benefited your business and was not for personal gain.  There have been a few people that have been successful in doing this (see: "Chesty Love"), but most have not, and in the end you'll probably be out extra money to the tax man.
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