Help on an income tax question, please.

linda b · Post by **linda b** » Thu Mar 30, 2006 2:57 pm

I know we can deduct the cost of our OSA equipment as a medical expense on our income taxes, but I read somewhere that we can also deduct the cost of operating it, such as electricty costs. I'm on supplemental oxygen and that machine uses alot of power. Can't find anything in the IRS publications that say it is okay to deduct this kind of expense. Do any of you have info on this subject and (for my skeptical husband's peace of mind) what is your source to support this being okay. Thanks a bunch.

Goofproof · Post by **Goofproof** » Thu Mar 30, 2006 3:08 pm

I think the best answer would to be call the IRS help line, and get the answer from the Horses ___ Opp's, Mouth! It makes sence but it might get your return under the microscope. XPAP only not worth the time, I used the O2 for 5 months, I just let it all go as not being worth the chance.

chdurie2 · Post by **chdurie2** » Fri Mar 31, 2006 12:50 pm

yes. you can deduct electrical costs for running medical machines. you need to make a reasonable estimate. on an ordinary cpap, i don't think that will be a lot. but if you have other medical machines, it may be worth it. you just need a reasonable basis of proof if audited. if you have a house with central air, they're not going to buy that half your electric bill was for cpap. you can also add mileage expenses for going to pick up any equipment or whatever. trivial if not a lot, not so trivial if you traveled a lot in the process of doing cpap. non-reimbursed medical must be more than 7.5 % of your agi, and you can only deduct the amount over the 7.5 % limitation.

chdurie2 · Post by **chdurie2** » Fri Mar 31, 2006 12:58 pm

my source is my federal income tax class in law school, and that my dad used to work for the IRS. i do have the tax code here somewhere. there may be a separate provision or it may just be part of the definition of unreimbursed medical expenses. an unreimbursed expense is one that you would not have made but for the approved IRS need. so here an unreimbursed medical expense is any expense that you would not have made but for the approved IRS medical need. so if your hubby needs peace of mind, may just be best to call the tax line and take down the badge number of the person who gives you the information, so that if you are audited, you can legitimately say you got bad info from an IRS rep.

Guest · Post by **Guest** » Fri Mar 31, 2006 5:01 pm

To deduct medical expenses doesn't the total amount have to be greater than 5% or 7% of your adjusted gross income?

Guest · Post by **Guest** » Fri Mar 31, 2006 5:38 pm

yes, but you can't deduct the total even if the total is over 7.5% of your agi. if the total is over 7.5% of your agi, you can only deduct the amount that's over the 7.5%. so if your agi is $20, 000, for example, and your total unreimbursed medical expenses are $2,000, 7.5% of your agi is $1500, so you can only deduct $500. it stinks, but the irs wants to dis-allow medical deductions for all except those whose expenses are really high and give those whose unreimbursed expenses are really high something of a break.

linda b · Post by **linda b** » Fri Mar 31, 2006 7:30 pm

You can also include medical premiums, dental expenses, medications, eyeglasses, and it all adds up. It had been a long time since we were able to meet the standard deduction threshold, but when my husband retired our premiums went way, way up and the prescription co-pay keeps rising (not to mention the number of prescriptions we have!). Between those and the interest on the loan for our motorhome (as a second home) we are beating the standard deduction again. It feels good to get a little bit of all that back.

sleepless_in_ny · Post by **sleepless_in_ny** » Fri Mar 31, 2006 11:01 pm

The following is the formula to calculate the amount of electric you are allowed to deduct as an expense:

1. Look at the lable on your concentrator/pap machine. It states the number of volts and amps it uses. If it is not on their refer to the manual for the informaiton. As an example use 115 volts at 4 amps. To conver to watts, multiply volts by amps: 115volts x 4amps = 460 wats.

2. Next, calculate the number of kilowatt - kw- hours per year. Multiply the watts your unit uses by .001KW/W to convert watts to kilowatts: 460 watts x .001 KW/W - .45KQ.

3. Multiply this answer by 24 hours/day or the average number of hours you use your unit per day and then by 365 for a yearly total. : ie: .46KW/ x 24 hours x 365 days/year - 4,029.6KWH/Y

4. Now multiply the result by the cost per kilowatt hour from your electric compnay. It is listed on your bill or you can call and the average per hour for the yeart. For example if it is .08 x 4,029.6KWH/Y = $322.37.

chdurie2 · Post by **chdurie2** » Fri Mar 31, 2006 11:31 pm

sleepless--

that seems like a great formula. however, you wouldn't multiply it times 24 hours because your machine is not running 24 hours a day. also, the cpap/medical machine total should be a reasonable percentage of your total electric bill for the year. i don't suggest that you rip yourself off, nor are you likely in terms of percentages to be audited. but if you do get audited, this is just the kind of expense the IRS loves to go after. it's right up there with home offices, because it gets abused. you can't claim $300 worth of electric on a cpap machine if your total electric for the year is $1000 unless you have/can get figures before and after cpap to back up your claim. it would seem that your formula is right, but i'm not an electrician and neither are IRS agents. but they know a cpap machine is not a refrigerator or an air conditioner.

sleepless_in_ny · Post by **sleepless_in_ny** » Sat Apr 01, 2006 9:32 am

You are right about the 24 hours, however I made reference to a concentrator (O2) and or cpap machine as originally requested.
I also addressed in my example

Quote:
Multiply this answer by 24 hours/day or the average number of hours you use.

I have been using this formula for my Mom for several years and have not been audited once. If I can find the original paper I will be able to give you the original source.

GarthsWorld · Post by **GarthsWorld** » Sat Apr 01, 2006 9:50 am

Additional things that you can include in medical expenses are round trip transportation to all appointments (I don't know the cents per mile that is calculated for this... I live in NYC and calculate round trip taxi fair. Receipts not needed if under $75), therapists (licensed, such as LCSW), and your health insurance payments. If, however, your health insurance payments come out of your paycheck and you have them deducted before taxes, then you can't count them in. Since I knew that I would exceed the amount to be able to deduct in 2005, I kept a simple spreadsheet this last year with all of my medical co-payments and shrink payments (I'm in NYC, most of us have them ) and a separate column for my round trip cab expense next to the expense. Made life very easy come tax time.

It just dawned on me... I should be keeping track of distilled water purchases! Small amounts at each purchase, but come end of the year it all adds up!

sleepless_in_ny · Post by **sleepless_in_ny** » Sat Apr 01, 2006 10:00 am

Distilled water is not allowable according to the IRS, nor is the soaps to clean the equipment, vitamins etc. If your doc writes a prescription for the distialled water you may have an argument, otherwise it is not allowable.

For milage for the year 2005, if was brooken down due to the huge increase in gas prices as follows

Jan - Aug 31
40.5 business
.15 medical
.14 charity

Sept 1- Dec 31
48.5 business
.22 medical
.14 charity

Not sure about the $75 (sounds high) cut off to have reciepts, as far as I have always known (per my accountant) it is for anything under $25, but as with anything, the more reciepts you have to back up whatever you claim the better.

I am in NYC also and those cab rides do add up and they are deductible, thanks goodness.

BuffaloAl · Post by **BuffaloAl** » Sat Apr 01, 2006 10:04 am

If you are going to search for medical deductions also keep track of all medicine purchased prescription and OTC, from Robitussin to Valium you can add it all up to try to get over the 7.5 % rule.

Guest · Post by **Guest** » Sat Apr 01, 2006 10:52 am

OTC meds are not deductible. Meds on a docs script are the only legal deductions. But go for it if you feel comfortable

BuffaloAl · Post by **BuffaloAl** » Sat Apr 01, 2006 11:52 am

OTC meds and OTC medical supplies such as knee braces certainly are deductible. Check your 1040 long form guide.

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