Tax Time! Can You Deduct the Cost of Your Patient Advocate?

This post has been shared by the AdvoConnection Blog. It was written with a patient-client audience in mind, but might be useful to you, too.

It is provided so you can find it in a search here at myAPHA.org, but you’ll need to link to the original post to read it in its entirety. Find the link to that post at the end of the excerpt.


Tax Time! Can You Deduct the Cost of Your Patient Advocate?

I’ve spent most of the weekend working on my income tax filing. Yeah. You know. The fun never ends. Then the lightbulb moment arrived when I realized that you, the reader of this blog, might be interested to know whether there is a tax benefit to hiring an advocate. So we’ll begin with my disclaimer:  I am not an IRS (or CRA) agent or specialist. I am not a tax accountant or even a regular accountant or even a tax preparer. I don’t even play one on TV. But I have spent hours on the phone with the IRS discussing this subject, and have reviewed it with real flesh-and-blood tax preparers and accountants. They all agree on the answer. It’s just that the answer is a little complicated. The key to the complication is that the definitive answer requires an IRS ruling, and the advocacy profession is so new that (as far as we know) the IRS has never audited someone who has taken a deduction for advocacy work. With no audit, there is no ruling, and with no ruling, we can only take an educated guess what that ruling would be. The ruling is important because it answers the legal question of deductibility of an expense. So, for example, if Mr. Jones hired an advocate for his wife, and then deducted the cost of that advocate as a medical expense on their tax filing, and then the IRS audited Mr. Jones’ return, then the IRS would look at that deduction and decide whether or not it was valid. THAT would be a ruling that would tell us yes, or no – and then we would have a definitive answer on whether the cost of an advocate would be legally deductible. But – that’s really just a complication for the moment. One we can deal with. In 2010, I spent hours on the phone with an IRS representative discussing the possibility of deducting the expense of an independent, private advocate. He explained about the need for a ruling, and we walked through how those rulings are made. A dozen conversations with tax preparers and accountants since then have confirmed this line of thinking. We began by looking at the definition, and the list of existing deductible medical expenses. (For our Canadian friends – we’re focusing here on the IRS. You can find parallel information about the CRA at their website).…


 

Link to the original full length post.

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