When can you deduct as a medical expense “natural” or non-traditional treatments?
Yesterday, an opinion from the United States Tax Court was published which should please individuals using “natural” or non-traditional treatments for medical conditions. Having tried Humphrey v. Commissioner of Internal Revenue, T.C. Memo 2013-198 (August 28, 2013) on behalf of the IRS in November 2012, I was “naturally” (for lack of a better word…) eager to read the opinion as soon as it was published to see if the IRS prevailed on all of the issues. It did not. And this surprised me.
I was not surprised in the “how-could-a-court-ever-rule-against-me?” sense, but rather, because of the analysis the Court applied in reaching its decision.
In Humphrey “as part of phytotherapy,” Petitioner purchased health foods and various natural supplements (including green supplements, flax seeds and D-3) to alleviate his prostate cancer. The IRS denied the expenses Petitioner claimed on his tax return for these health foods and supplements. The Court allowed them.
Subject to limitations, the Internal Revenue Code provides that expenses paid for medical care of the taxpayer are allowed as a deduction. I.R.C. § 213(a). Expenses for medicine or drugs may only be taken into account if it is “a prescribed drug or is insulin.” I.R.C. § 213(b). A “prescribed drug” is defined as “a drug or biological which requires a prescription of a physician for its use by an individual.” I.R.C. § 213(d)(3).
The Humphrey Court noted that “special foods are deductible in special cases when prescribed by a doctor” and that “it is pertinent to determine whether the health foods and supplements were prescribed by a doctor.”
So how does a taxpayer show that special foods or supplements were “prescribed” (and thus may deduct the expense)? In Humphrey, the Court allowed the expenses after “Petitioner provided credible testimony that his doctors suggested the health foods and cited medical guidelines by Johns Hopkins Medical Urology, Harvard Medical School, and the Mayo Clinic.”
So, for tax law purposes, is a prescription only a prescription if it is written on a doctor’s little green note pad? No. In fact, your credible testimony that your doctors suggested the [fill in the food/supplement/treatment here] and your testimony citing “medical guidelines by [fill in notable medical/educational institution here]” may be enough.
That’s good “green” news—for both you and the environment!