When a Swimming Pool Turns Into a Tax Deduction
A home elevator. Tuition for a special-needs school. Fees for assisted living. Even a swimming pool. When these and other items qualify as medical expenses under the tax code, the costs can be deductible—but many Americans don’t know that.
Melanie Lauridsen, a senior staffer at the American Institute of CPAs, recently surprised a friend who is installing a home elevator for a disabled spouse by pointing out it could qualify for a medical-expense deduction. The swimming-pool deduction surprised a client of Jeffrey Porter, a CPA in Huntington, W.Va. When the client mentioned some years ago that he was putting in an enclosed pool recommended by a doctor for a family member with a chronic disease, Mr. Porter told him it could be deductible if he had the right paperwork. The net deduction came to more than $100,000, says Mr. Porter, and it held up on audit by the Internal Revenue Service.
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Many filers are shut out of this tax break by two limits. One is the need to itemize deductions on Schedule A rather than take the standard deduction. The other is that expenses must be above 7.5% of adjusted gross income, or AGI, to qualify for a deduction. Because the medical-expense deduction isn’t common, some taxpayers who qualify may not be aware of it–or of the wide array of expenses it applies to. What’s allowed is far beyond what insurance covers and can further boost the deduction.
A good example: fees at special-ed schools. At The Siena School, which has campuses in Maryland and Northern Virginia for 200 students with learning differences like dyslexia, the entire $48,000 tuition qualifies as a medical expense. But Siena parents can deduct more than just tuition. Medical expenses also include fees for professional testing plus the cost of transporting a student to and from school. Bekah Atkinson, Siena’s admissions director, provides this information from a CPA to parents.
For taxpayers whose medical expenses aren’t high enough to qualify, knowing what’s eligible is still a good idea. That’s because the expenses allowed for the deduction are also allowed for Flexible Spending Account and Health Savings Account reimbursements, but without the 7.5% AGI threshold. A 10-page list of eligible medical and dental expenses is included in IRS Publication 502. Here’s more to know:
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