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Ask the taxgirl: Foreign Medical Expenses

January 30, 2011 · 4 comments

Taxpayer asks:

at 5’4″ and 235# i was definately diagnoised with morbid obesity.. pre-diabetic and had BMI of 40.3.
My choice of surgeons was one in Mexico.. my insurance would not cover his fees.. which.. even if
I would have chosen one in the US and filed insurance claim.. I would have paid more out of pocket.

My surgery was on March 20, 2007. My tax guy told me I could not deduct medical fees paid because it was in Mexico.
. now I’m seeing others say they did .. along with travel…… even after reading Publication 502.. there is no real clarification
that I can tell.. whether or not I can deduct those fees.. if I can I would like to provide to my tax guy.. either that or get a new one.

I was hoping you could clear this up for me..

taxgirl says:

This is a tricky question. I haven’t seen anything in any IRS Pub or statement that says that a medical procedure has to be performed by a U.S. licensed doctor in the U.S. in order to be deductible. That said, I do believe that it will, in most cases, more difficult to prove that expenses incurred outside of the country were both medically necessary and specifically prescribed by a physician.

When making the determination, the normal rules for deducting medical expenses would apply. When it comes to weight loss, you cannot deduct the cost of surgeries or programs to simply look or feel better; the procedure must be a treatment for a specific disease diagnosed by a physician (obesity would apply). Weight loss surgery, since it has a cosmetic component, can be controversial at best so make sure that you have great documentation to prove that it was medically necessary.

I’m not sure why you chose a doctor in Mexico but assuming that your primary care doctor prescribed the procedure and it otherwise meets the criteria for a deductible medical expense, it would seem that it could be deductible. However, some other rules apply:

  • The surgery must be legal. You cannot deduct amounts paid for illegal operations, treatments, or controlled substances even if prescribed or performed by a licensed doctor.
  • The rules for medical travel still apply. However, travel for purely personal reasons to another city for an operation or other medical care is not deductible.
  • You can’t deduct the cost of certain medications from another country not consumed in that country. You cannot deduct the cost of a drug brought into the country illegally or one that the FDA has not agreed could be legally imported, even if your foreign doctor advises that it is necessary. You can, however, include the cost of a prescribed drug you use in another country if the drug is legal in the U.S. and in the foreign country.

I’m not a fan of most insurance companies (don’t even get me started) and I do believe in individual choice when it comes to medical treatment. However, the treatments that insurance companies approve tend to be a good starting point (please note that I said starting point as I am in no way saying that insurance companies only approve tax deductible expenses) for expenses that the IRS might also approve. You might want to find out why your insurance company nixed covering the procedure; that reason could (though not necessarily) be instrumental in making the decision to take the claim for tax purposes. Again, I’m not implying that insurance companies rule the day on making decisions about legitimate expenses – they don’t even remotely – but they can provide some initial insight into reasons for a potential denial on the tax side.

Again, you should be prepared for the fact that providing documentation to prove the deductibility of an expense which is non-traditional can be difficult but is absolutely a requirement. If your tax preparer balks at the deduction, I’d ask why; he or she may see something in your paperwork that signals that it’s too risky. I wouldn’t go near the deduction unless you have the paperwork to back up your claims; that said, if you do have the right documents and you meet the criteria, then you should absolutely talk to a tax professional about claiming the expenses as a deduction.

Like any good lawyer, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the taxgirl! – On twitter at http://www.twitter.com/taxgirl and on Facebook at http://www.facebook.com/taxgirl

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{ 2 comments… read them below or add one }

1 Brittany January 30, 2011 at 6:43 pm

In addition, they need to move pretty fast on this if they determine it’s deductible. The statute of limitations will more than likely expire April 15 of this year, assuming the expenses were paid in 2007 and are being claimed on the 2007 calendar year return.

2 Yvonne April 11, 2012 at 9:55 pm

Hi there,

Question for you. This year I spent approximatley $20,000 of my own cash to help support my terminally ill father receive medical treamtent in Europe. My father live in Europe and is not a US citizen. Is there any clause that will allow me to claim any of this $20K. I also incurred travel expenses going to the medical clinic in Europe.

Please advise

Y

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