Dear Tax Talk:
If a person has surgery in another country (Mexico) and pays for it out-of-pocket, are those expenses tax deductible (travel, hospital, surgeon)?
News reports have recently focused on the popularity
of overseas surgical procedures. We now call it
medical tourism. Not only are these procedures
less expensive, patients have said that the aftercare
is superior to procedures done in the United States.
I've heard clients and friends say that the doctors
give you their cell phone numbers and don't think
twice of visiting you in a hotel or other facility
to monitor your progress. Unfortunately, most
insurers (including Medicare) are unwilling to
cover procedures performed overseas. Ironically,
though, Blue Cross of California was offering
premium reductions for selecting HMOs that
require the insured to seek nonemergency care
Medical expenses are itemized deductions.
The total of all your medical expenditures for
the year are only deductible to the extent they
exceed 7.5 percent of your adjusted gross income.
For example, if your AGI is $100,000, you can
only get a tax benefit for your medical expenses
if they exceed $7,500 and you otherwise itemize.
Medical expenses are the costs of
diagnosis, cure, mitigation, treatment or prevention
of disease, and the costs for treatments affecting
any part or function of the body. There is no
requirement in the regulations that the procedures
be performed in the U.S. by a licensed professional
or institute. Because this obviously invites room
for abuse, I recommend that you obtain proper
documentation of the procedures and amounts spent.
Travel expenditures and lodging while away from home can also be considered medical expenses. 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. The amount you include in medical expenses for lodging cannot 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.