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IRS Publication 502 (Medical and Dental Bills (for 2022 Returns)); IRS Publication 503 (Little one and Dependent Care Bills (for 2022 Returns))
The IRS has launched up to date variations of Publications 502 and 503 for the 2022 tax 12 months. Publication 502 describes the medical bills which can be deductible by taxpayers on their 2022 federal revenue tax returns. Publication 503 explains the necessities that taxpayers should meet to say the dependent care tax credit score (DCTC) beneath Code § 21 for baby and dependent care bills.
The 2022 model of Publication 502 is considerably much like its 2021 counterpart. Reflecting prior steering (see our Checkpoint article), private protecting tools (e.g., masks, hand sanitizer, and hand sanitizing wipes) for the first goal of stopping the unfold of COVID-19 is now included within the checklist of medical bills. Clarifications have been added relating to bills to deal with extreme use of alcohol and medicines, and related greenback quantities (e.g., the usual mileage charge to be used of an vehicle to acquire medical care) have been revised to mirror their 2022 inflation-adjusted values. Publication 502 has additionally been revised to mirror that the well being protection tax credit score (HCTC) shouldn’t be obtainable after 2021. Publication 503 has been revised to notice that a lot of the non permanent adjustments to the DCTC and DCAP guidelines that have been supplied as COVID-related aid are now not obtainable, and to delete references to these adjustments. It additionally references prior steering beneath which DCAPs may very well be amended to permit unused quantities from 2021 to hold over to 2022 (see our Checkpoint article).
EBIA Remark: Publication 502 supplies useful steering on what qualifies as a medical expense beneath Code § 213(d), and thus helps determine the bills that could be reimbursed or paid by well being FSAs, HSAs, or HRAs, or coated on a tax-favored foundation beneath different group well being plans (e.g., employer-sponsored medical plans). However Publication 502 must be used with warning in reference to these advantages as a result of it addresses the deductibility of medical bills—it doesn’t account for variations within the guidelines for reimbursing bills beneath well being FSAs, HSAs, or HRAs. Likewise, Publication 503 is written primarily to assist taxpayers decide whether or not bills qualify for the DCTC. Whereas comparable necessities should be met for bills to be reimbursable beneath a DCAP, warning is suggested when consulting the publication for DCAP functions as a result of there are some variations. For extra info, see EBIA’s Cafeteria Plans handbook at Sections XX.D.7 (“Different Steering Concerning What Is Medical Care: Warning Concerning IRS Publication 502”), XX.D.8 (“Distinguishing Deductibility From Reimbursement of Medical Care Bills (and Why It Issues)”), XX.M (“Desk of Frequent Bills, Displaying Whether or not They Are for ‘Medical Care’”), XXIII.C (“DCAP Participation vs. Claiming the Dependent Care Tax Credit score”), and XXIV (“What Bills Can Be Reimbursed Underneath a DCAP?”). See additionally EBIA’s Shopper-Pushed Well being Care handbook at Sections XV.B (“HSA Distributions Are Tax-Free If for Certified Medical Bills”) and XXIV.B (“HRAs Might Reimburse Solely Code § 213(d) Bills”), and EBIA’s Self-Insured Well being Plans handbook at Part VI.B.1 (“Solely Code § 213 Medical Care Receives Favorable Tax Therapy”).
Contributing Editors: EBIA Workers.
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