The Internal Revenue Service recently issued a news release cautioning taxpayers and health spending plan administrators that personal expenses for general health and wellbeing do not count as medical expenses for tax purposes. In other words, personal expenses cannot be deducted or reimbursed through health savings accounts, health reimbursement arrangements, health flexible spending accounts, or medical savings accounts (HSAs, HRAs, FSAs, or MSAs).
If a plan is not qualified, all payments issued to taxpayers under the plan, including reimbursements for actual medical expenses, are considered income. Unfortunately, some businesses misrepresent the conditions under which food and wellness expenses can be paid or reimbursed using FSAs and other health spending programs.
For example, some companies falsely claim that doctors’ notes based solely on self-reported health information can transform non-medical food, wellness, and exercise expenses into medical expenses; however, this is not the case. Such documentation would not prove that an otherwise personal expense meets the condition of being related to a targeted diagnosis-specific activity or treatment; these personal expenses do not actually qualify as medical expenses.
To learn more, the IRS encourages taxpayers visit the Frequently Asked Questions portion of their website. As always, if you have questions, please contact your HW&Co. advisor for further assistance.
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