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IRS Affirms that Transition-Related Care is Tax Deductible

  • Details on U.S. Transgender Medical Tax deductionable Expenses as outlined in IRS Pub 502....

    IRS Publication 502[18] lists medical expenses that are tax-deductible to the extent they 1) exceed 7.5% of the individual's adjusted gross income, and 2) were not paid for by any insurance or other third party. For example, a person with $20,000 gross adjusted income can deduct all medical expenses after the first $1,500 spent. If that person incurred $16,000 in medical expenses during the tax year, then $14,500 is deductible. At higher incomes where the 7.5% floor becomes substantial, the deductible amount is often less than the standard deduction, in which case it is not cost-effective to claim.

    Included in IRS Publication 502 are several deductions that may apply to gender transition treatments:

    • Hospital services if staying for medical treatment;
    • Laboratory fees;
    • Legal fees;
    • Lodging during treatments;
    • Meals taken during treatments;
    • Medicines, which could include HRT;
    • Operations if they are "legal operations that are not for unnecessary cosmetic surgery";
    • Psychoanalysis;
    • Psychologist;
    • Sterilization, which could include orchiectomy;
    • Therapy;
    • Transportation; and
    • X-ray.

    The deduction for operations was denied to a transsexual woman but was restored in tax court[19]. The deductibility of the other items in Publication 502 was never in dispute.

    This post was edited by Former Member at January 20, 2012 6:42 PM GMT
      January 20, 2012 6:39 PM GMT
  • The Internal Revenue Service (IRS) has affirmed that transgender people can deduct their hormone therapy and sex reassignment surgery expenses.  This announcement indicates that the IRS will follow the U.S. Tax Court’s 2010 ruling in O’Donnabhain v. Commissioner, which held that gender identity disorder (GID) is a medical condition, and transgender people receiving hormone therapy or sex reassignment surgery as treatment for GID may deduct these costs as medical expenses.

    As with other medical expenses, anyone seeking to deduct transition-related care from their gross income must be able to document that they incurred these expenses as treatment for a medical condition—in this instance, GID.  For more information about deducting transition-related care from your federal taxes, see NCTE’s factsheet, Federal Taxes and Transgender People: Frequently Asked Questions.

    The IRS’s affirmation of this policy marks one of the strongest victories we’ve seen from the Obama Administration.  NCTE applauds the IRS, as well as our colleagues at Gay and Lesbian Advocates and Defenders and the Human Rights Campaign, for their work on this issue.

    Full story at:-

      January 7, 2012 12:21 PM GMT