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Moms get tax deduction

By Kay Bell · Bankrate.com
Thursday, February 10, 2011
Posted: 3 pm ET

While the new Congress is once again fighting health care reform battles, the Internal Revenue Service has resolved a medical tax deduction issue that had mothers across America up in arms.

Last fall, the IRS issued its list of medical treatments, devices and the like that are deductible. Lots of common medical treatments made the list. Breast pumps and other lactation devices that moms use, in most cases when they return to work after delivering a baby, did not make the tax deduction cut.

The information is important because you must have expenses that total more than 7.5 percent of your adjusted gross income before you can claim them as itemized expenses on Schedule A.  The more that are allowed, the easier it is to meet that threshold.

The allowable medical expenses list also generally applies to  flexible spending accounts. These workplace savings plans, usually referred to as FSAs, allow you to put money into the account via automatic contributions before your payroll taxes are calculated. That cuts your tax bill a tad and then you get to use the untaxed money to pay for IRS-approved unreimbursed medical expenses.

Well today, moms got an early Mothers Day gift from Uncle Sam. The IRS reversed itself and in Announcement 2011-14 declared that breast pumps and supplies that assist lactation are medical care under the Internal Revenue Code because, like obstetric care, "they are for the purpose of affecting a structure or function of the body of the lactating woman." 

The decision also clears the way for FSA reimbursements for the expenditures.

I'm sure the IRS did its tax and medical due diligence in coming up with this deduction policy change.

And I'm pretty sure that the IRS employees who worked on this issue also got lots of free advice from their mothers, wives and sisters!

This change is good for moms, but remember that another not-so-favorable change for FSA reimbursements is still in effect this tax year. Over-the-counter medications are no longer automatically reimburseable. Starting in 2011, to get your FSA money to cover these costs, you must have your doctor write you a prescription for the drugs lined up on pharmacy and grocery store shelves.

Yeah, it's a silly requirement and one that, like the workplace breast-feeding rule, was part of the health care reform act. But I don't believe we aspirin and cough syrup users have nearly as much sway with the IRS as do moms. So just make sure you find other allowable expenses on which to spend your FSA money this year so that you don't lose it.

Make sure you get all the latest tax news and tips this filing season by subscribing to Bankrate's free Daily Tax Tip newsletter.

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