US Internal Revenue Service: p502--1999

8/14/2019 US Internal Revenue Service: p502--1999

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Important Changes

Self-employed health insurance deduction rate in-crease. For 1999, the rate increased from 45% to 60%.

Stop-smoking programs. You can now include inmedical expenses amounts you pay for a program to

stop smoking. If you paid for a program in 1997 or 1998,you may be able to file an amended return on Form1040X, Amended U.S. Individual Income Tax Return,to include in medical expenses the amounts you paidfor that stop-smoking program. However, you cannotinclude in medical expenses amounts you pay for drugsthat do not require a prescription, such as nicotine gumor patches, that are designed to help stop smoking.

Photographs of missing children. The Internal Rev-enue Service is a proud partner with the National Cen-ter for Missing and Exploited Children. Photographs ofmissing children selected by the Center may appear in

this publication on pages that would otherwise be blank.You can help bring these children home by looking atthe photographs and calling 1800THELOST(18008435678) if you recognize a child.

Important Reminder

Medical savings account. You may be able to makedeductible contributions to a medical savings account(MSA). If you are an employee of a small business(fewer than 50 employees), or self-employed and cov-ered only by a high deductible health plan, you may be

eligible to have an MSA. You deduct MSA contributionson Form 1040, line 25, not on Schedule A (Form 1040)as a qualified medical expense. See Publication 969,Medical Savings Accounts (MSAs), for more informa-tion.

IntroductionThis publication explains how to claim a deduction foryour medical and dental expenses. It contains an al-phabetical list of items that you can or cannot includein figuring your deduction. It also explains how to treatinsurance reimbursements and other reimbursements

you may receive for medical care.See How To Get More Information near the end of

this publication for information about getting publica-tions and forms.

What Form Is Used?You figure your medical expense deduction on Sched-ule A, Form 1040. You cannot claim medical expenseson Form 1040A or Form 1040EZ. An example of afilled-in medical and dental expense part of ScheduleA is shown at the end of this publication.

Department of the TreasuryInternal Revenue Service

Publication 50 2Cat. No. 15002Q

Medical andDentalExpenses

For use in preparing

1999 Returns


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How Much CanYou Deduct?You can deduct only the amount of your medical anddental expenses that is more than 7.5% of your ad-

justed gross income (line 34, Form 1040).In this publication, the term 7.5% limit is used to

refer to 7.5% of your adjusted gross income. The

phrase subject to the 7.5% limit is also used. Thisphrase means that you must subtract 7.5% (.075) ofyour adjusted gross income from your medical ex-penses to figure your medical expense deduction.

Example. Your adjusted gross income is $20,000,7.5% of which is $1,500. You paid medical expensesof $800. You cannot deduct any of your medical ex-penses because they are not more than 7.5% of youradjusted gross income.

Separate returns. If you and your spouse live in anoncommunity property state and file separate returns,

each of you can include only the medical expenseseach actually paid. Any medical expenses paid out ofa joint checking account in which you and your spousehave the same interest are considered to have beenpaid equally by each of you, unless you can show oth-erwise.

Community property states. If you and yourspouse live in a community property state and fileseparate returns, any medical expenses paid out ofcommunity funds are divided equally. Each of youshould include half the expenses. If medical expensesare paid out of the separate funds of one spouse, onlythe spouse who paid the medical expenses can includethem. If you live in a community property state, are

married, and file a separate return, see Publication 555,Community Property.

What Expenses CanYou Include This Year?You can include only the medical and dental expensesyou paid this year, regardless of when the serviceswere provided. (But see Decedents, later.) If you paymedical expenses by check, the day you mail or deliverthe check generally is the date of payment. If you use

a pay-by-phone or on-line account to pay yourmedical expenses, the date reported on the statementof the financial institution showing when payment wasmade is the date of payment. You can include medicalexpenses you charge to your credit card in the year thecharge is made. It does not matter when you actuallypay the amount charged.

If you did not claim a medical or dental expense thatwould have been deductible in an earlier year, you canfile Form 1040X for the year in which you overlookedthe expense. Do not claim the expense on this year'sreturn. Generally, an amended return must be filedwithin 3 years from the date the original return was filed

or within 2 years from the time the tax was paid,whichever is later.

You cannot include medical expenses that were paidby an insurance company or other sources. This is truewhether the payments were made directly to you, to thepatient, or to the provider of the medical services.

Decedent's medical expenses. Medical expenses fora decedent that are paid from his or her estate are

treated as paid at the time the medical services wereprovided if they are paid within the one-year periodbeginning with the day after the date of death. SeeDecedents, later.

Medical expenses paid before death by the decedentare included in figuring any deduction for medical anddental expenses on the decedent's final income tax re-turn. This includes expenses for the decedent as wellas for the decedent's spouse and dependents.

Whose Medical Expenses

Can You Include?You can include medical expenses you pay for yourselfand for the individuals discussed in this section.

Spouse. You can include medical expenses you paidfor your spouse. To claim these expenses, you musthave been married either at the time your spouse re-ceived the medical services or at the time you paid themedical expenses.

Example 1. Mary received medical treatment beforeshe married Bill. Bill paid for the treatment after theymarried. Bill can include these expenses in figuring his

medical expense deduction even if Bill and Mary fileseparate returns.If Mary had paid the expenses before she and Bill

married, Bill could not include Mary's expenses in hisseparate return. Mary would include the amounts shepaid during the year in her separate return. If they fileda joint return, the medical expenses both paid duringthe year would be used to figure their medical expensededuction.

Example 2. This year, John paid medical expensesfor his wife Louise who died last year. John marriedBelle this year and they file a joint return. Because Johnwas married to Louise when she incurred the medicalexpenses, he can include those expenses in figuringhis medical deduction for this year.

Dependents. You can include medical expenses youpaid for your dependent. To claim these expenses, theperson must have been your dependent either at thetime the medical services were provided or at the timeyou paid the expenses. A person generally qualifies asyour dependent for purposes of the medical expensededuction if:

1) That person lived with you for the entire year as amember of your household or is related to you,

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2) That person was a U.S. citizen or resident, or aresident of Canada or Mexico for some part of thecalendar year in which your tax year began, and

3) You provided over half of that person's total supportfor the calendar year.

You can include the medical expenses of any personwho is your dependent even if you cannot claim anexemption for him or her on your return.

Example 1. Last year your son was your dependent.This year he no longer qualifies as your dependent.However, you paid $800 this year for medical expensesyour son incurred last year, when he was your de-pendent. You can include the $800 in figuring this year'smedical expense deduction. You cannot include thisamount on last year's return.

Example 2. You cannot claim an exemption for yourson, age 22, because he earned more than the stand-ard deduction amount and he is not a student. However,he is still your dependent because you provided morethan half of his support, including $800 for medical ex-penses. You can include the $800 in figuring your

medical expense deduction.

Example 3. You provided more than half of yourmarried daughter's support, including medical expensesof $1,200. She and her husband file a joint return. Al-though you may not be able to claim an exemption foryour daughter, she is still your dependent, and you caninclude in your medical expenses the $1,200 you paid.

Adopted child. You can include medical expensesthat you paid for a child before adoption, if the childqualified as your dependent when the medical serviceswere provided or when the expenses were paid. If youpay back an adoption agency or other persons for

medical expenses they paid under an agreement withyou, you are treated as having paid those expensesprovided you clearly substantiate that the payment isdirectly attributable to the medical care of the child. Butif you pay back medical expenses incurred and paidbefore adoption negotiations began, you cannot includethem as medical expenses.

TIPYou may be able to take a credit or exclusionfor other expenses related to adoption. SeePublication 968, Tax Benefits for Adoption, for

more information.

Child of divorced or separated parents. If either

parent can claim a child as a dependent under the rulesfor divorced or separated parents, each parent can in-clude the medical expenses he or she pays for the childeven if an exemption for the child is claimed by theother parent.

Support claimed under a multiple support agree-ment. A multiple support agreement is used when twoor more people provide more than half of a person'ssupport, but no one alone provides more than half. Ifyou are considered to have provided more than half ofa person's support under such an agreement, you caninclude medical expenses you pay, even if you cannot

claim the person because he or she had gross incomeof more than the standard deduction amount or filed a

joint return.Any medical expenses paid by others who joined you

in the agreement cannot be included as medical ex-penses by anyone. However, you can include the entireunreimbursed amount you paid for medical expenses.

Example 1. You and your three brothers each pro-vide one-fourth of your mother's total support. Under a

multiple support agreement, you claim your mother asa dependent. You paid all of her medical expenses.Your brothers repaid you for three-fourths of these ex-penses. In figuring your medical expense deduction,you can include only one-fourth of your mother's med-ical expenses. Your brothers cannot include any partof the expenses. However, if you and your brothersshare the nonmedical support items and you separatelypay all of your mother's medical expenses, you can in-clude the amount you paid for her medical expenses inyour medical expenses.

Example 2. Assume the same facts as in the pre-vious example except that your mother had gross in-

come that was more than her standard deductionamount. You meet the support test under a multiplesupport agreement but you cannot claim an exemptionfor your mother because she had gross income thatwas more than her standard deduction amount. How-ever, you can include the amount you paid for yourmother's medical expenses.

DecedentsThe survivor or personal representative of a decedentcan choose to treat certain expenses paid by the de-

cedent's estate for the decedent's medical care as paidby the decedent at the time the medical services wereprovided. The expenses must be paid within the one-year period beginning with the day after the date ofdeath. If you are the survivor or personal representativemaking this choice, you must attach a statement to thedecedent's Form 1040 (or the decedent's amended re-turn, Form 1040X) saying that the expenses have notbeen and will not be claimed on the estate tax return.

What if the decedent's return had been filed and themedical expenses were not included? Form 1040Xcan be filed for the year or years the expenses aretreated as paid, unless the period for filing an amendedreturn for that year has passed. Generally, an amendedreturn must be filed within 3 years of the date the ori-ginal return was filed, or within 2 years from the timethe tax was paid, whichever date is later.

Example. John properly filed last year's income taxreturn. He died this year with unpaid medical expensesof $1,500 from last year and $2,000 from this year. Hisexecutor will pay the expenses in January of next year.The executor can file an amended return for last yearclaiming the $1,500 medical expenses. The $2,000 ofmedical expenses from this year can be included on thisyear's return, which will be the decedent's final return.

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What if you pay medical expenses of a deceasedspouse or dependent? If you paid medical expensesfor your deceased spouse or dependent, include themas medical expenses on your Form 1040 in the yearpaid, whether they are paid before or after the dece-dent's death. The expenses can be included if the per-son was your spouse or dependent either at the timethe medical services were provided or at the time youpaid the expenses.

Medical CareMedical care expenses include amounts paid for thediagnosis, cure, mitigation, treatment, or prevention ofdisease, and for treatments affecting any part or func-tion of the body. The expenses must be primarily toalleviate or prevent a physical or mental defect or ill-ness. Expenses for solely cosmetic reasons generallyare not expenses for medical care. Also, expenses thatare merely beneficial to one's general health (for ex-ample, vacations) are not expenses for medical care.

Medical care expenses include the premiums youpay for insurance that covers the expenses of medicalcare, and the amounts you pay for transportation to getmedical care. Medical care expenses include amountswithin certain limits, for any qualified long-term care in-surance contract. See Insurance Premiums andTransportation, later, for more information.

Medical ExpensesFollowing is a list of items that you can or cannot in-clude in figuring your medical expense deduction. The

items are listed in alphabetical order.

AbortionYou can include in medical expenses the amount youpay for a legal abortion.

AcupunctureYou can include in medical expenses the amount youpay for acupuncture.

AlcoholismYou can include in medical expenses amounts you payfor an inpatient's treatment at a therapeutic center foralcohol addiction. This includes meals and lodgingprovided by the center during treatment.

You can also include in medical expenses transpor-tation costs you pay to attend meetings of an AlcoholicsAnonymous Club in your community if your attendanceis pursuant to medical advice that membership in theAlcoholics Anonymous Club is necessary for the treat-ment of a disease involving the excessive use of alco-holic liquors.

AmbulanceYou can include in medical expenses amounts you payfor ambulance service.

Artificial LimbYou can include in medical expenses the amount youpay for an artificial limb.

Artificial TeethYou can include in medical expenses the amount youpay for artificial teeth.

AutoetteSee Wheelchair, later.

Baby Sitting and Child CareYou cannot include in medical expenses amounts youpay for the care of your children even if the expensesenable you to get medical or dental treatment. Also, anyexpense allowed as a child care credit cannot betreated as an expense paid for medical care. See also

Healthy babyunder Nursing Services, later.

Birth Control PillsYou can include in medical expenses the amount youpay for birth control pills prescribed by a doctor.

Braille Books and MagazinesYou can include in medical expenses the part of thecost of braille books and magazines for use by avisually-impaired person that is more than the cost ofregular printed editions.

Capital ExpensesYou can include in medical expenses amounts you payfor special equipment installed in your home, or for im-provements, if their main purpose is medical care foryou, your spouse, or a dependent. The cost of perma-nent improvements that increase the value of theproperty may be partly included as a medical expense.The cost of the improvement is reduced by the increasein the value of the property. The difference is a medicalexpense. If the value of the property is not increasedby the improvement, the entire cost is included as amedical expense.

Certain improvements made to accommodate yourhome to your disabled condition, or that of your spouse

or your dependents who live with you, do not usuallyincrease the value of the home and the cost can beincluded in full as medical expenses. These improve-ments include, but are not limited to, the following items.

Constructing entrance or exit ramps for your home.

Widening doorways at entrances or exits to yourhome.

Widening or otherwise modifying hallways and in-terior doorways.

Installing railings, support bars, or other modifica-tions to bathrooms.

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CrutchesYou can include in medical expenses the amount youpay to buy or rent crutches.

Dancing LessonsYou cannot include the cost of dancing lessons, swim-ming lessons, etc., even if they are recommended bya doctor, if they are only for the improvement of generalhealth.

Dental TreatmentYou can include in medical expenses the amounts youpay for dental treatment. This includes fees paid todentists for X-rays, fillings, braces, extractions,dentures, etc.

Diaper ServiceYou cannot include in medical expenses the amountyou pay for diapers or diaper services, unless they areneeded to relieve the effects of a particular disease.

Drug AddictionYou can include in medical expenses amounts you payfor an inpatient's treatment at a therapeutic center fordrug addiction. This includes meals and lodging at thecenter during treatment.

DrugsSee Medicines, later.

Electrolysis orHair RemovalSee Cosmetic Surgery, earlier.

EyeglassesYou can include in medical expenses amounts you payfor eyeglasses and contact lenses needed for medicalreasons. You can also include fees paid for eye ex-aminations.

Founder's FeeSee Lifetime CareAdvance Payments, later.

Funeral ExpensesYou cannot include in medical expenses amounts you

pay for funerals. However, funeral expenses may bedeductible on the decedent's federal estate tax return.

Guide Dog orOther AnimalYou can include in medical expenses the cost of aguide dog or other animal to be used by a visually-impaired or hearing-impaired person. You can also in-clude the cost of a dog or other animal trained to assistpersons with other physical disabilities. Amounts youpay for the care of these specially trained animals arealso medical expenses.

Hair TransplantSee Cosmetic Surgery, earlier.

Health Club DuesYou cannot include in medical expenses health clubdues, YMCA dues, or amounts paid for steam baths foryour general health or to relieve physical or mentaldiscomfort not related to a particular medical condition.

You cannot include in medical expenses the cost ofmembership in any club organized for business, pleas-ure, recreation, or other social purpose.

Health InstituteYou can include in medical expenses fees you pay fortreatment at a health institute only if the treatment isprescribed by a physician and the physician issues astatement that the treatment is necessary to alleviatea physical or mental defect or illness in the individualreceiving the treatment.

Health Maintenance

Organization (HMO)You can include in medical expenses amounts you payto entitle you, or your spouse (if filing a joint return), ora dependent to receive medical care from a healthmaintenance organization. These amounts are treatedas medical insurance premiums. See Insurance Pre-miums, later.

Hearing AidsYou can include in medical expenses the cost of ahearing aid and the batteries you buy to operate it.

Home CareSee Nursing Services, later.

Hospital ServicesYou can include in medical expenses amounts you payfor the cost of inpatient care at a hospital or similarinstitution if the main reason for being there is to receivemedical care. This includes amounts paid for meals andlodging. Also see Lodging, later.

Household HelpYou cannot include in medical expenses the cost ofhousehold help, even if such help is recommended bya doctor. This is a personal expense that is notdeductible. However, you may be able to include certainexpenses paid to a person providing nursing-type ser-vices. See Nursing Services, later. Also, certain main-tenance or personal care services provided for qualifiedlong-term care can be included in medical expenses.

Illegal Operations and TreatmentsYou cannot include in medical expenses amounts youpay for illegal operations, treatments, or controlledsubstances whether rendered or prescribed by licensedor unlicensed practitioners.

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Insurance PremiumsYou can include in medical expenses insurance premi-ums you pay for policies that cover medical care. Poli-cies can provide payment for:

Hospitalization, surgical fees, X-rays, etc.,

Prescription drugs,

Replacement of lost or damaged contact lenses, or

Membership in an association that gives cooper-ative or so-called free-choice medical service, orgroup hospitalization and clinical care.

You can also include in medical expenses premiumspaid for a qualified long-term care insurance contract.However, insurance premiums you pay for qualifiedlong-term care insurance contracts are subject to addi-tional limitations. See Long-term Care Contracts,Qualified, later.

The insurance policy can pay you, the patient, or thecare provider (hospital, doctor, dentist, etc.) directly.

If you have a policy that provides more than one kindof payment, you can include the premiums for the

medical care part of the policy if the charge for themedical part is reasonable. The cost of the medicalportion must be separately stated in the insurancecontract or given to you in a separate statement.

Cafeteria plans. Do not include in your medical anddental expenses insurance premiums paid by anemployer-sponsored health insurance plan (cafeteriaplan) unless the premiums are included in box 1 of yourForm(s) W2. Also, do not include any other medicaland dental expenses paid by the plan unless theamount paid is included in box 1 of your Form(s) W2.

Medicare A. If you are covered under social security(or if you are a government employee who paid Medi-care tax), you are enrolled in Medicare A. The payrolltax paid for Medicare A is not a medical expense. If youare not covered under social security (or were not agovernment employee who paid Medicare tax), you canvoluntarily enroll in Medicare A. In this situation thepremiums paid for Medicare A can be included as amedical expense on your tax return.

Medicare B. Medicare B is a supplemental medicalinsurance. Premiums you pay for Medicare B are amedical expense. If you applied for it at age 65 or afteryou became disabled, you can deduct the monthly

premiums you paid. If you were over age 65 or disabledwhen you first enrolled, check the information you re-ceived from the Social Security Administration to findout your premium.

Prepaid insurance premiums. Premiums you paybefore you are 65 for insurance for medical care foryourself, your spouse, or your dependents after youreach 65 are medical care expenses in the year paid ifthey are:

1) Payable in equal yearly installments, or more often,and

2) Payable for at least 10 years, or until you reach age65 (but not for less than 5 years).

Unused sick leave used to pay premiums. You mustinclude in gross income cash payments you receive atthe time of retirement for unused sick leave. You mustalso include in gross income the value of unused sickleave that, at your option, your employer applies to thecost of your continuing participation in your employer'shealth plan after you retire. You can include this cost

of continuing participation in the health plan as a med-ical expense.

If you participate in a health plan where your em-ployer automatically applies the value of unused sickleave to the cost of your continuing participation in thehealth plan (and you do not have the option to receivecash), you do not include the value of the unused sickleave in gross income. You cannot include this cost ofcontinuing participation in that health plan as a medicalexpense.

You cannot include premiums you pay for:

Life insurance policies,

Policies providing payment for loss of earnings,

Policies for loss of life, limb, sight, etc.,

Policies that pay you a guaranteed amount eachweek for a stated number of weeks if you are hos-pitalized for sickness or injury, or

The part of your car insurance premiums that pro-vides medical insurance coverage for all personsinjured in or by your car because the part of thepremium for you, your spouse, and your dependentsis not stated separately from the part of the premiumfor medical care for others.

Health insurance costs for self-employed persons.If you were self-employed and had a net profit for theyear, were a general partner (or a limited partner re-ceiving guaranteed payments), or received wages froman S corporation in which you were a more than 2%shareholder (who is treated as a partner), you may beable to deduct up to 60% of the amount paid for healthinsurance on behalf of yourself, your spouse, and de-pendents. You take this deduction on Form 1040. If youitemize your deductions, include the remaining premi-ums with all other medical care expenses on ScheduleA (Form 1040), subject to the 7.5% limit.

You may not take the deduction for any month in

which you were eligible to participate in any subsidizedhealth plan maintained by your employer or yourspouse's employer.

If you qualify to take the deduction, use the Self-employed Health Insurance Deduction Worksheetin theForm 1040 instructions to figure the amount you candeduct. But, if either of the following applies, do not usethe worksheet.

You had more than one source of income subjectto self-employment tax.

You file Form 2555, Foreign Earned Income, orForm 2555EZ, Foreign Earned Income Exclusion.

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If you cannot use the worksheet in the Form 1040 in-structions, use the worksheet in Publication 535, Busi-ness Expenses, to figure your deduction.

Laboratory FeesYou can include in medical expenses the amounts youpay for laboratory fees that are part of your medicalcare.

Lead-based Paint RemovalYou can include in medical expenses the cost of re-moving lead-based paints from surfaces in your hometo prevent a child who has or has had lead poisoningfrom eating the paint. These surfaces must be in poorrepair (peeling or cracking) or within the child's reach.The cost of repainting the scraped area is not a medicalexpense.

If, instead of removing the paint, you cover the areawith wallboard or paneling, treat these items as capitalexpenses. See Capital Expenses, earlier. Do not in-clude the cost of painting the wallboard as a medicalexpense.

Learning DisabilityYou can include in medical expenses tuition fees youpay to a special school for a child who has severelearning disabilities caused by mental or physicalimpairments, including nervous system disorders. Yourdoctor must recommend that the child attend theschool. See Schools and Education, Special, later.

You can also include tutoring fees you pay on yourdoctor's recommendation for the child's tutoring by ateacher who is specially trained and qualified to workwith children who have severe learning disabilities.

Legal FeesYou can include in medical expenses legal fees youpaid that are necessary to authorize treatment formental illness. However, you cannot include in medicalexpenses fees for the management of a guardianshipestate, fees for conducting the affairs of the personbeing treated, or other fees that are not necessary formedical care.

Lifetime CareAdvance PaymentsYou can include in medical expenses a part of a life-care fee or founder's fee you pay either monthly oras a lump sum under an agreement with a retirementhome. The part of the payment you include is the

amount properly allocable to medical care. The agree-ment must require that you pay a specific fee as acondition for the home's promise to provide lifetime carethat includes medical care.

Dependents with disabilities. You can include inmedical expenses advance payments to a private in-stitution for lifetime care, treatment, and training of yourphysically or mentally impaired dependent upon yourdeath or when you become unable to provide care. Thepayments must be a condition for the institution's futureacceptance of your dependent and must not berefundable.

Payments for future medical care. Generally, youare not allowed to include in medical expenses currentpayments for medical care (including medical insur-ance) to be provided substantially beyond the end of theyear. This rule does not apply in situations where thefuture care is purchased in connection with obtaininglifetime care of the type described earlier.

Lodging

You can include in medical expenses the cost of mealsand lodging at a hospital or similar institution if yourmain reason for being there is to receive medical care.See Nursing Home, later.

You may be able to include in medical expenses thecost of lodging not provided in a hospital or similar in-stitution. You can include the cost of such lodging whileaway from home if you meet all of the following re-quirements.

1) The lodging is primarily for and essential to medicalcare.

2) The medical care is provided by a doctor in a li-

censed hospital or in a medical care facility relatedto, or the equivalent of, a licensed hospital.

3) The lodging is not lavish or extravagant under thecircumstances.

4) There is no significant element of personal pleas-ure, recreation, or vacation in the travel away fromhome.

The amount you include in medical expenses forlodging cannot be more than $50 for each night for eachperson. Lodging is included for a person for whomtransportation expenses are a medical expense be-

cause that person is traveling with the person receivingthe medical care. For example, if a parent is travelingwith a sick child, up to $100 per night is included as amedical expense for lodging. (Meals are not deduct-ible.)

Do not include the cost of your lodging while youare away from home for medical treatment if you do notreceive that treatment from a doctor in a licensed hos-pital or in a medical care facility related to, or theequivalent of, a licensed hospital or if that lodging is notprimarily for or essential to the medical care you arereceiving.

Long-term Care Contracts, QualifiedA qualified long-term care insurance is an insurancecontract that provides only coverage of qualified long-term care services. The contract:

1) Must be guaranteed renewable,

2) Must not provide for a cash surrender value or othermoney that can be paid, assigned, pledged, orborrowed,

3) Must provide that refunds, other than refunds on thedeath of the insured or complete surrender or can-cellation of the contract, and dividends under the

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contract must be used only to reduce future premi-ums or increase future benefits, and

4) Generally must not pay or reimburse expenses in-curred for services or items that would be reim-bursed under Medicare, except where Medicare isa secondary payer, or the contract makes per diemor other periodic payments without regard to ex-penses.

Qualified Long-term Care ServicesQualified long-term care services are:

1) Necessary diagnostic, preventative, therapeutic,curing, treating, mitigating, and rehabilitative ser-vices, and maintenance and personal care services,and

2) Required by a chronically ill individual and providedpursuant to a plan of care prescribed by a licensedhealth care practitioner.

Chronically ill individual. You are chronically ill if you

have been certified by a licensed health care practi-tioner within the previous 12 months as one of the fol-lowing:

1) You are unable for at least 90 days, to perform atleast two activities of daily living without substantialassistance from another individual, due to loss offunctional capacity. Activities of daily living areeating, toileting, transferring, bathing, dressing, andcontinence, or

2) You require substantial supervision to be protectedfrom threats to health and safety due to severecognitive impairment.

Periodic Payments Not TaxedYou can generally exclude from gross income benefitsyou receive under a per diem type qualified long-termcare insurance contract, subject to a limit of $190 a day($69,350 a year) for 1999. The $190 is indexed for in-flation.

Itemized deductions. If you itemize deductions, youcan include the following as medical expenses onSchedule A (Form 1040).

1) Unreimbursed expenses for qualified long-termcare services.

2) Qualified long-term care premiums up to theamounts shown below.

a) Age 40 or less $210.

b) Age 41 to 50 $400.

c) Age 51 to 60 $800.

d) Age 61 to 70 $2,120.

e) Age 71 and above $2,660.

TIPThe limit on premiums is for each person.

Maternity ClothesYou cannot include in medical expenses amounts youpay for maternity clothes.

Meals

You can include in medical expenses the cost of mealsat a hospital or similar institution if the main purpose forbeing there is to get medical care.

You cannot include in medical expenses the cost ofmeals that are not part of inpatient care.

Medical Information PlanYou can include in medical expenses amounts paid toa plan that keeps your medical information so that it canbe retrieved from a computer data bank for your med-ical care.

Medical Savings AccountsYou cannot deduct as a qualified medical expenseamounts you contribute to a medical savings account(MSA). You cannot deduct qualified medical expensesas an itemized deduction if you pay for them with atax-free distribution from your MSA. You also cannotuse other funds equal to the amount of the distributionand claim a deduction. For more information on MSAs,see Publication 969.

Medical ServicesYou can include in medical expenses amounts you payfor legal medical services provided by:

Physicians, Surgeons,

Specialists, or

Other medical practitioners.

MedicinesYou can include in medical expenses amounts you payfor prescribed medicines and drugs. A prescribed drugis one that requires a prescription by a doctor for its useby an individual. You can also include amounts you payfor insulin. Except for insulin, you cannot include inmedical expenses amounts you pay for a drug that is

not prescribed.

Controlled substances. You cannot include in med-ical expenses amounts you pay for controlled sub-stances (such as marijuana, laetrile, etc.), in violationof federal law.

Mentally Retarded,Special Home forYou can include in medical expenses the cost ofkeeping a mentally retarded person in a special home,not the home of a relative, on the recommendation of

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a psychiatrist to help the person adjust from life in amental hospital to community living.

Nursing HomeYou can include in medical expenses the cost of med-ical care in a nursing home or home for the aged foryourself, your spouse, or your dependents. This in-cludes the cost of meals and lodging in the home if the

main reason for being there is to get medical care.Do not include the cost of meals and lodging if thereason for being in the home is personal. You can,however, include in medical expenses the part of thecost that is for medical or nursing care.

Nursing ServicesYou can include in medical expenses wages and otheramounts you pay for nursing services. Services neednot be performed by a nurse as long as the servicesare of a kind generally performed by a nurse. This in-cludes services connected with caring for the patient'scondition, such as giving medication or changing

dressings, as well as bathing and grooming the patient.These services can be provided in your home or an-other care facility.

Generally, only the amount spent for nursing ser-vices is a medical expense. If the attendant also pro-vides personal and household services, these amountsmust be divided between the time spent performinghousehold and personal services and the time spent fornursing services. However, certain maintenance orpersonal care services provided for qualified long-termcare can be included in medical expenses. See Long-term Care Contracts, Qualified, earlier. Additionally,certain expenses for household services or for the careof a qualifying individual incurred to allow you to workmay qualify for the child and dependent care credit. SeePublication 503, Child and Dependent Care Expenses.

You can also include in medical expenses part of theamounts you pay for that attendant's meals. Divide thefood expense among the household members to findthe cost of the attendant's food. Then apportion thatcost in the same manner, as in the preceding para-graph. If you had to pay additional amounts for house-hold upkeep because of the attendant, you can includethe extra amounts with your medical expenses. Thisincludes extra rent or utilities you pay because youmoved to a larger apartment to provide space for theattendant.

Employment taxes. You can include social securitytax, FUTA, Medicare tax, and state employment taxesyou pay for a nurse, attendant, or other person whoprovides medical care as a medical expense. For in-formation on employment tax responsibilities of house-hold employers, see Publication 926, Household Em-ployer's Tax Guide.

Healthy baby. You cannot include the cost of nursingservices for a normal, healthy baby. But you may beable to take a credit for child care expenses. See Pub-

lication 503 for more information. You also may be ableto take the child tax credit. See the instructions in yourtax package.

OperationsYou can include in medical expenses amounts you payfor legal operations that are not for unnecessary cos-metic surgery. See Cosmetic Surgery, earlier.

OptometristSee Eyeglasses, earlier.

Organ DonorsSee Transplants, later.

OsteopathYou can include in medical expenses amounts you payto an osteopath for medical care.

OxygenYou can include in medical expenses amounts you payfor oxygen and oxygen equipment to relieve breathingproblems caused by a medical condition.

Personal Use ItemsYou cannot include in medical expenses an item ordi-narily used for personal, living, or family purposes un-less it is used primarily to prevent or alleviate a physicalor mental defect or illness. For example, the cost of awig purchased upon the advice of a physician for themental health of a patient who has lost all of his or her

hair from disease can be included with medical ex-penses.Where an item purchased in a special form primarily

to alleviate a physical defect is one that in normal formis ordinarily used for personal, living, or family pur-poses, the excess of the cost of the special form overthe cost of the normal form is a medical expense (seeBraille Books and Magazines, earlier).

ProsthesisSee Artificial Limb, earlier.

Psychiatric CareYou can include in medical expenses amounts you payfor psychiatric care. This includes the cost of supportinga mentally ill dependent at a specially equipped medicalcenter where the dependent receives medical care. SeePsychoanalysis, later, and Transportation, later.

PsychoanalysisYou can include in medical expenses payments forpsychoanalysis. However, you cannot include pay-ments for psychoanalysis that you must get as a partof your training to be a psychoanalyst.

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PsychologistYou can include in medical expenses amounts you payto a psychologist for medical care.

Schools and Education, SpecialYou can include in medical expenses payments to aspecial school for a mentally impaired or physicallydisabled person if the main reason for using the schoolis its resources for relieving the disability. You can in-

clude, for example, the cost of:

Teaching braille to a visually impaired child,

Teaching lip reading to a hearing impaired child, or

Giving remedial language training to correct a con-dition caused by a birth defect.

The cost of meals, lodging, and ordinary educationsupplied by a special school can be included in medicalexpenses only if the main reason for the child's beingthere is the resources the school has for relieving themental or physical disability.

You cannot include in medical expenses the cost of

sending a problem child to a special school for benefitsthe child may get from the course of study and thedisciplinary methods.

SterilizationYou can include in medical expenses the cost of a legalsterilization (a legally performed operation to make aperson unable to have children).

Stop-smoking ProgramsYou can now include in medical expenses amounts youpay for a program to stop smoking. If you paid for astop-smoking program in 1997 or 1998, you may beable to file an amended return on Form 1040X to in-clude in medical expenses the amounts you paid forthat stop-smoking program. However, you cannot in-clude in medical expenses amounts you pay for drugsthat do not require a prescription, such as nicotine gumor patches, that are designed to help stop smoking.

SurgerySee Operations, earlier.

Swimming LessonsSee Dancing Lessons, earlier.

TelephoneYou can include in medical expenses the cost and re-pair of special telephone equipment that lets ahearing-impaired person communicate over a regulartelephone.

TelevisionYou can include in medical expenses the cost ofequipment that displays the audio part of televisionprograms as subtitles for hearing-impaired persons.This may be the cost of an adapter that attaches to a

regular set. It also may be the cost of a speciallyequipped television that exceeds the cost of the samemodel regular television set.

TherapyYou can include in medical expenses amounts you payfor therapy you receive as medical treatment.

Patterning exercises. You can include in medicalexpenses amounts you pay to an individual for giving

patterning exercises to a mentally retarded child.These exercises consist mainly of coordinated physicalmanipulation of the child's arms and legs to imitatecrawling and other normal movements.

TransplantsYou can include in medical expenses payments youmake for surgical, hospital, laboratory, and transporta-tion expenses for a donor or a possible donor of a kid-ney or other organ. You cannot include expenses if youdid not pay for them.

A donor or possible donor can include surgical,hospital, laboratory, and transportation expenses inmedical expenses only if he or she pays for them.

TransportationYou can include in medical expenses amounts paid fortransportation primarily for, and essential to, medicalcare.

You can include:

Bus, taxi, train, or plane fares, or ambulance ser-vice,

Transportation expenses of a parent who must gowith a child who needs medical care,

Transportation expenses of a nurse or other personwho can give injections, medications, or othertreatment required by a patient who is traveling toget medical care and is unable to travel alone, and

Transportation expenses for regular visits to see amentally ill dependent, if these visits are recom-mended as a part of treatment.

You cannot include:

Transportation expenses to and from work, even ifyour condition requires an unusual means of trans-portation, or

Transportation expenses if, for nonmedical reasonsonly, you choose to travel to another city, such asa resort area, for an operation or other medical careprescribed by your doctor.

Car expenses. You can include out-of-pocket ex-penses for your car, such as gas and oil when you useyour car for medical reasons. You cannot include de-preciation, insurance, general repair, or maintenanceexpenses.

If you do not want to use your actual expenses, youcan use a standard rate of 10 cents a mile for use ofyour car for medical reasons.

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You can also include the cost of parking fees andtolls. You can add these fees and tolls to your medicalexpenses whether you use actual expenses or use thestandard mileage rate.

Example. Bill Jones drove 2,800 miles for medicalreasons during the year. He spent $200 for gas, $5 foroil, and $50 for tolls and parking. He wants to figure theamount he can include in medical expenses both waysto see which gives him the greater deduction.

He figures the actual expenses first. He adds the$200 for gas, the $5 for oil, and the $50 for tolls andparking for a total of $255.

He then figures the standard mileage amount. Hemultiplies the 2,800 miles by 10 cents a mile for a totalof $280. He then adds the $50 tolls and parking for atotal of $330.

Bill includes the $330 of car expenses with his othermedical expenses for the year because the $330 ismore than the $255 he figured using actual expenses.

Trips

You can include in medical expenses amounts you payfor transportation to another city if the trip is primarilyfor, and essential to, receiving medical services. Youmay be able to include up to $50 per night for lodging.See Lodging, earlier.

You cannot include in medical expenses a trip orvacation taken merely for a change in environment,improvement of morale, or general improvement ofhealth, even if you make the trip on the advice of adoctor.

Tuition

You can include in medical expenses charges formedical care included in the tuition of a college or pri-vate school, if the charges are separately stated in thebill or given to you by the school. See Learning Disa-bility, earlier, and Schools and Education, Special,earlier.

Weight Loss ProgramYou cannot include the cost of a weight loss programfor your general health even if your doctor prescribesthe program.

WheelchairYou can include in medical expenses amounts you payfor an autoette or a wheelchair used mainly for the reliefof sickness or disability, and not just to provide trans-portation to and from work. The cost of operating andkeeping up the autoette or wheelchair is also a medicalexpense.

X-ray FeesYou can include in medical expenses amounts you payfor X-rays that you get for medical reasons.

Impairment-Related WorkExpenses

(Business or Medical)If you are disabled and have expenses which are nec-essary for you to be able to work (impairment-relatedwork expenses), take a business deduction for theseexpenses, rather than a medical deduction. You aredisabled if you have:

A physical or mental disability (for example,blindness or deafness) that functionally limits yourbeing employed, or

A physical or mental impairment (for example, asight or hearing impairment) that substantially limitsone or more of your major life activities, such as

performing manual tasks, walking, speaking,breathing, learning, or working.

Deduct impairment-related expenses as businessexpenses if they are:

Necessary for you to do your work satisfactorily,

For goods and services not required or used, otherthan incidentally, in your personal activities, and

Not specifically covered under other income taxlaws.

If you are self-employed, deduct the business ex-

penses on the appropriate form (Schedule C, CEZ,E, or F) used to report your business income and ex-penses. If you are an employee with impairment-relatedwork expenses, complete Form 2106, Employee Busi-ness Expenses, or Form 2106EZ, Unreimbursed Em-ployee Business Expenses. Your impairment-relatedwork expenses are not subject to the2%-of-adjusted-gross-income limit that applies to otheremployee business expenses.

Example. You are blind. You must use a reader todo your work. You use the reader both during yourregular working hours at your place of work and outsideyour regular working hours away from your place ofwork. The reader's services are only for your work. Youcan deduct your expenses for the reader as businessexpenses.

Insurance ReimbursementYou must reduce your total medical expenses for theyear by all reimbursements for medical expenses thatyou receive from insurance or other sources during theyear. This includes payments from Medicare.

Generally, you do not reduce medical expenses bypayments you receive for:

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Permanent loss or loss of use of a member orfunction of the body (loss of limb, sight, hearing,etc.) or disfigurement that is based on the natureof the injury without regard to the amount of time lostfrom work,

Loss of earnings, or

Damages for personal injury or sickness.

You must, however, reduce your medical expensesby any part of these payments that is designated formedical costs. See How To Figure Your Deduction,later.

What If Your InsuranceReimbursement Is More ThanYour Medical Expenses?You do not have a medical deduction if you are reim-bursed for all of your medical expenses for the year.

Figure 1.

*See Premiums paid by you and your employer in this publication.

Was any part ofyour premiumspaid by youremployer?

Were youremployers

contributions toyour premiumsincluded in yourincome?

Did you pay anypart of thepremiums?

NONE of theexcessreimbursement istaxable.

ALL of the excessreimbursement istaxable.

PART of theexcessreimbursement istaxable.*

No

Yes

Yes

No

No

Yes

Is Your Excess MedicalReimbursement Taxable?

Premiums paid by you. If you pay the entire premiumfor your medical insurance or all the costs of a plansimilar to medical insurance, and your insurance pay-ments or other reimbursements are more than your totalmedical expenses for the year, you have excess re-imbursement. Generally, you do not include the ex-cess reimbursement in your gross income. However,gross income does include total payments in excessof the per diem limit for qualified long-term care insur-ance. See Periodic Payments Not Taxed, earlier, for the

per diem amounts.

Premiums paid by you and your employer. If bothyou and your employer contribute to your medical in-surance plan and your employer's contributions are notincluded in your gross income, you must include in yourgross income the part of your excess reimbursementthat is from your employer's contribution.

Example. You are covered by your employer'smedical insurance policy. The annual premium is$2,000. Your employer pays $600 of that amount andthe balance of $1,400 is taken out of your wages. The

part of any excess reimbursement you receive underthe policy that is from your employer's contributions isfigured like this:

You must include in your gross income 30% of anyexcess reimbursement you received for medical ex-penses under the policy.

Premiums paid by your employer. If your employeror your former employer pays the total cost of yourmedical insurance plan and your employer's contribu-tions are not included in your income, you must reportall of your excess reimbursement as other income.

More than one policy. If you are covered under morethan one policy, the costs of which are paid by both youand your employer, you must first divide the medicalexpense among the policies to figure the excess re-imbursement from each policy. Then divide the policycosts to figure the part of any excess reimbursementthat is from your employer's contribution.

Example. You are covered by your employer'shealth insurance policy. The annual premium is $1,200.Your employer pays $300, and the balance of $900 isdeducted from your wages. You also paid the entirepremium ($250) for a personal health insurance policy.

During the year, you paid medical expenses of$3,600. In the same year, you were reimbursed $2,500under your employer's policy and $1,500 under yourpersonal policy.

You figure the part of the excess reimbursement thatis from your employer's contribution like this:

Total annual cost of policy $2,000

Amount paid by employer 600

Employer's contribution in relation to the total annual cost of thepolicy($600 $2,000) 30%

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What If You Receive InsuranceReimbursement in a Later Year?

If you are reimbursed in a later year for a medical ex-pense you deducted in an earlier year, you must reportas income the amount you received from insurance orother sources that is equal to, or less than, the amountyou previously deducted as medical expenses. How-ever, do not report as income the amount of re-imbursement you received up to the amount of yourmedical deductions that did not reduce your tax for theearlier year.

Example. You are single. Your adjusted gross in-come last year was $20,000. During that year you paidmedical insurance premiums of $500 and other medicalexpenses of $1,900. You deducted $900, figured like

this:

For more information about the recovery of anamount that you claimed as an itemized deduction inan earlier year, see Recoveriesin Publication 525.

What If You Are Reimbursed forMedical Expenses You Did NotDeduct?If you did not deduct a medical expense in the year you

paid it because your medical expenses were not morethan 7.5% of your adjusted gross income, or becauseyou did not itemize deductions, do not include in incomethe reimbursement for this expense that you receive ina later year. However, if the reimbursement is morethan the expense, see What If Your Insurance Re-imbursement Is More Than Your Medical Expenses?earlier.

Example. Last year, you had $500 of medical ex-penses. You cannot deduct the $500 because it is lessthan 7.5% of your adjusted gross income. If, in a lateryear, you are reimbursed for any of the $500 of medicalexpenses, you do not include that amount in your grossincome.

Sale of Medical PropertyYou may have a taxable gain if you sell medicalequipment or property, the cost of which you deductedas a medical expense on your tax return for a previousyear. The taxable gain is the amount of the selling pricethat is more than the equipment's adjusted basis. Theadjusted basis is the portion of the equipment's costthat was not deductible because of the 7.5% limit (5%for 19831986 and 3% before 1983) used to computethe medical deduction. Use the formula below (with

amounts from the return on which the cost of theequipment was deducted) to figure the adjusted basis.

7.5% (5% for19831986,3% before 1983)of Adjusted GrossIncome

X

Cost ofEquipment

Total MedicalExpenses

=AdjustedBasis

If your allowable itemized deductions were more thanyour adjusted gross income for the year the cost of theequipment was deducted, the adjusted basis of theequipment is increased by a portion of the surplusitemized deductions. Use the formula below to figure

the increase.

Surplus ItemizedDeductions

X

Cost ofEquipmentAdjusted Basis

Total ItemizedDeductions

= Increase

Add the increase to the adjusted basis. The result isthe new adjusted basis for purposes of computing thetaxable gain. See chapter 3 in Publication 544, Salesand Other Dispositions of Assets, for information on thetax treatment of the gain.

Step 1.

Reimbursement from employer's policy $2,500

Reimbursement from your policy 1,500

Total reimbursement $4,000

Amount of medical expenses from your policy [($1,500 $4,000) $3,600 total medical expenses] $1,350

Amount of medical expenses from your employer's policy [($2,500 $4,000) $3,600 total medical expenses] 2,250

Total medical expenses $3,600

Excess reimbursement from your employer's policy($2,500

$2,250) $250

Step 2.

Because both you and your employer contributed to the cost of this policy, youmust divide the cost to determine the excess reimbursement from your em-ployer's contribution.

Employer's contribution in relation to the annual cost of the policy($300 $1,200) 25%

Amount to report as other income on line 21, Form 1040(25% $250) $62.50

Step 1.

Medical expenses $1,900

Insurance premiums 500

Total $2,400

Minus 7.5% (.075) of adjusted gross income 1,500

Total medical expense deduction $900

Step 2.

Last year, your itemized deductions, including medical expenses, were $5,100.This year, you collected $600 from your insurance policy for part of last year'smedical expenses. If you had collected it last year, your deduction for medicalexpenses would have been only $300, figured like this:

Medical expenses $1,900

Insurance premiums 500

Total $2,400

Minus: insurance payments 600

Balance $1,800

Minus: 7.5% (.075) of adjusted gross income 1,500

Total medical expense deduction $300

Step 3.

Your $900 medical expense deduction last year reduced your income tax in thatyear. You must include the $600 of insurance reimbursement in income thisyear. Report the $600 on line 21 of Form 1040.

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Example of sale of medical property. You havea heart condition and difficulty breathing. Your doctorprescribed oxygen equipment to help you breathe. Lastyear, you bought the oxygen equipment for $3,000. Youitemized deductions and included it in your medicalexpense deduction.

Last year you also paid $750 for deductible medicalservices and $6,400 for other itemized deductions. Youradjusted gross income was $5,000.

Taking into account the 7.5% limit on medical ex-

penses, your allowable itemized deductions totaled$9,775, figured as follows:

There was a $4,775 surplus of allowable itemized

deductions over adjusted gross income ($9,775 $5,000 = $4,775).

Allocating the nondeductible limit. To determinethe part of the 7.5% limit that is allocable to the oxygenequipment, multiply the limit, $375, by the ratio of costof the equipment, $3,000, to the total medical ex-penses, $3,750 [$375 ($3,000 $3,750) = $300].Your basis in the equipment is this $300 portion of thecost of the equipment that is nondeductible becauseof the 7.5% limit.

Allocating surplus deductions. To determine thepart of the surplus itemized deductions that is allocableto the oxygen equipment, multiply the total availablesurplus deductions, $4,775, by the ratio of the deduct-

ible portion of the amount paid for the oxygen equip-ment, $2,700 ($3,000 cost of equipment minus $300attributable to the 7.5% limit) to the total available de-ductions, $9,775. Your adjusted basis in the oxygenequipment includes this $1,319 [$4,775 ($2,700 $9,775) = $1,319]. This amount is the portion of surplusdeductions allocable to the oxygen equipment. Yourtotal adjusted basis in the equipment is $1,619 ($300+ $1,319).

Determining gain. This year, you sold the oxygenequipment for $2,000. You realized a gain of $381($2,000 $1,619). This amount represents the recoveryof an amount previously deducted for federal incometax purposes and is taxable as ordinary income.

Settlement of Damage SuitIf you receive an amount in settlement of a personalinjury suit, the part that is for medical expenses de-ducted in an earlier year is included in income in thelater year if your medical deduction in the earlier yearreduced your income tax in that year. See What If YouReceive Insurance Reimbursement in a Later Year,discussed earlier.

Future medical expenses. If you receive an amountin settlement of a damage suit for personal injuries thatis properly allocable or determined to be for futuremedical expenses, you must reduce any medical ex-penses for these injuries until the amount you receivedhas been completely used.

How To Figure Your

DeductionTo figure your medical and dental expense deduction,complete lines 14 of Schedule A, Form 1040, as fol-lows:

Line 1. Enter the amount you paid for medical ex-penses after reducing the amount by payments youreceived from insurance and other sources.

Line 2. Enter your adjusted gross income from Form1040.

Line 3. Multiply the amount on line 2 (adjusted gross

income) by 7.5% (.075) and enter the result.

Line 4. If line 3 is more than line 1, enter zero. Other-wise, subtract the amount on line 3 from the amounton line 1. This is your deduction for medical and dentalexpenses.

Example. Bill and Helen Jones belong to a groupmedical plan and part of their insurance is paid by Bill'semployer. They file a joint return, and their adjustedgross income is $33,004. The following medical ex-penses Bill and Helen paid this year have been reducedby payments they received from the insurance com-pany.

1) For themselves, Bill and Helen paid $375 for pre-scription medicines and drugs, $337 for hospitalbills, $439 for doctor bills, $295 for hospitalizationinsurance, $380 for medical and surgical insurance,and $33 for transportation for medical treatment,which totals $1,859.

2) For Grace Taylor (Helen's dependent mother), theypaid $300 for doctors, $300 for insulin, and $175 foreyeglasses, which totals $775.

3) For Betty Jones (Bill's dependent sister), they paid$450 for doctors and $350 for prescription medi-cines and drugs, which totals $800.

Bill and Helen add all their medical and dental ex-penses together ($1,859 + $775 + $800 = $3,434).They figure their deduction on the medical and dentalexpenses portion of Schedule A, Form 1040, shownlater.

RECORDS

Recordkeeping. For each medical expense,you must keep a record of the name and ad-dress of each person you paid, and the amount

and date of the payment.When requested by the IRS, you must be able to

substantiate your medical deduction with a statement

Oxygen equipment $3,000

Medical services 750

Total medical expenses $3,750

Limit (7.5% of adjustedgross income of $5,000) 375

Allowable medicalexpense deduction $3,375

Other itemized deductions 6,400

Allowable itemized deductions $9,775

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Bill and Helen Jones 0 0 0 0 0 0 0 0 0

3,434

2,475

33,004

959

OMB No. 1545-0074SCHEDULES A&B Schedule AItemized Deduct ions(Form 1040)

(Schedule B is on back)Department of the TreasuryInternal Revenue Service Attach to Form 1040. See Instructions for Schedules A and B (Form 1040).

AttachmentSequence No. 07

Name(s) shown on Form 1040 Your social security number

Caution. Do not include expenses reimbursed or paid by others.MedicalandDental

Expenses

1Medical and dental expenses (see page A-1)122

3Multiply line 2 above by 7.5% (.075)3Subtract line 3 from line 1. If line 3 is more than line 1, enter -0-4 4

Enter amount from Form 1040, line 34

(99)

1999

or itemized invoice from the person or entity you paidshowing the nature of the expense, for whom it wasincurred, the amount paid, the date of payment, andany other information the IRS may deem necessary.Do not send these records with your return.

How To Get More InformationYou can order free publications and forms, ask taxquestions, and get more information from the IRS inseveral ways. By selecting the method that is best foryou, you will have quick and easy access to tax help.

Free tax services. To find out what services areavailable, get Publication 910, Guide to Free Tax Ser-vices. It contains a list of free tax publications and anindex of tax topics. It also describes other free tax in-formation services, including tax education and assist-

ance programs and a list of TeleTax topics.

Personal computer. With your personal com-puter and modem, you can access the IRS onthe Internet at www.irs.gov. While visiting our

web site, you can select:

Frequently Asked Tax Questions(located underTaxpayer Help & Ed) to find answers to questionsyou may have.

Forms & Pubsto download forms and publicationsor search for forms and publications by topic orkeyword.

Fill-in Forms(located under Forms & Pubs) to enterinformation while the form is displayed and thenprint the completed form.

Tax Info For Youto view Internal Revenue Bulletinspublished in the last few years.

Tax Regs in English to search regulations and theInternal Revenue Code (under United States Code(USC)).

Digital Dispatchand IRS Local News Net(both lo-cated under Tax Info For Business) to receive ourelectronic newsletters on hot tax issues and news.

Small Business Corner(located under Tax Info ForBusiness) to get information on starting and oper-ating a small business.

You can also reach us with your computer using FileTransfer Protocol at ftp.irs.gov.

TaxFax Service. Using the phone attached to

your fax machine, you can receive forms andinstructions by calling 7033689694. Followthe directions from the prompts. When you order forms,enter the catalog number for the form you need. Theitems you request will be faxed to you.

Phone. Many services are available by phone.

Ordering forms, instructions, and publications. Call18008293676 to order current and prior year

forms, instructions, and publications.

Asking tax questions. Call the IRS with your taxquestions at 18008291040.

TTY/TDD equipment. If you have access toTTY/TDD equipment, call 18008294059 to asktax questions or to order forms and publications.

TeleTax topics. Call 18008294477 to listen topre-recorded messages covering various tax topics.

Evaluating the quality of our telephone services.To ensure that IRS representatives give accurate,courteous, and professional answers, we evaluate thequality of our telephone services in several ways.

A second IRS representative sometimes monitorslive telephone calls. That person only evaluates theIRS assistor and does not keep a record of anytaxpayer's name or tax identification number.

We sometimes record telephone calls to evaluateIRS assistors objectively. We hold these recordingsno longer than one week and use them only tomeasure the quality of assistance.

We value our customers' opinions. Throughout thisyear, we will be surveying our customers for theiropinions on our service.

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Walk-in. You can walk in to many post offices,libraries, and IRS offices to pick up certainforms, instructions, and publications. Also,

some libraries and IRS offices have:

An extensive collection of products available to printfrom a CD-ROM or photocopy from reproducibleproofs.

The Internal Revenue Code, regulations, InternalRevenue Bulletins, and Cumulative Bulletins avail-able for research purposes.

Mail. You can send your order for forms, in-structions, and publications to the DistributionCenter nearest to you and receive a response

within 10 workdays after your request is received. Findthe address that applies to your part of the country.

Western part of U.S.:

Western Area Distribution CenterRancho Cordova, CA 957430001

Central part of U.S.:Central Area Distribution CenterP.O. Box 8903Bloomington, IL 617028903

Eastern part of U.S. and foreign addresses:Eastern Area Distribution CenterP.O. Box 85074Richmond, VA 232615074

CD-ROM. You can order IRS Publication 1796,Federal Tax Products on CD-ROM, and obtain:

Current tax forms, instructions, and publications.

Prior-year tax forms, instructions, and publications.

Popular tax forms which may be filled in electron-ically, printed out for submission, and saved forrecordkeeping.

Internal Revenue Bulletins.

The CD-ROM can be purchased from NationalTechnical Information Service (NTIS) by calling18772336767 or on the Internet atwww.irs.gov/cdorders. The first release is available inmid-December and the final release is available in late

January.IRS Publication 3207, Small Business Resource

Guide, is an interactive CD-ROM that contains infor-mation important to small businesses. It is available inmid-February. You can get one free copy by calling18008293676.

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Index

AAbortion ................................... 4Acupuncture ............................ 4

Adopted child's medical ex-penses ................................. 3AGI limitation ........................... 2

Alcoholism ............................... 4Ambulance ............................... 4Artificial limb ............................ 4Artificial teeth ........................... 4

Assistance (SeeMore information)Autoette (SeeWheelchair)

BBaby sitting .............................. 4

Birth control pills ...................... 4Braille books and magazines .. 4

CCafeteria plans ........................ 7Capital expenses ..................... 4Car ........................................... 5Car expenses:

Medical expense ................ 11Child care ................................ 4Chiropractor ............................. 5

Christian science practitioner .. 5Chronically ill ........................... 9Community property ................ 2Contact lenses ......................... 5Controlled substance ............... 9Cosmetic surgery .................... 5Crutches .................................. 6

DDancing lessons ...................... 6Decedent's medicalexpenses .......................... 2, 3Dental treatment ...................... 6

Dependent's medical expenses 2Diaper service ......................... 6Drug addiction ......................... 6

Drugs (SeeMedicines)

EElectrolysis (SeeCosmetic

surgery)Employment taxes ................. 10

Eyeglasses .............................. 6

FFounder's fee .......................... 6

Free tax services ................... 16Funeral expenses .................... 6

GGuide dog ................................ 6

HHair removal (SeeCosmetic

surgery)Hair transplant (SeeCosmetic

surgery)Health club dues ..................... 6

Health institute ......................... 6Health maintenance organization(HMO) .................................. 6Hearing aid .............................. 6

Help (SeeMore information) HMO (SeeHealth maintenance

organization ( HMO )) Home care (SeeNursing services)Hospital services (See also

Lodging) ................................. 6Household help ....................... 6

How to figure your deduction 15

IIllegal operations andtreatments ............................ 6Impairment-related expenses 12Insurance premiums ................ 7Insurance reimburse-ment ....................... 12, 13, 14Insurance reimbursement in

a later year ..................... 14Medical expenses you did not

deduct ............................. 14Reimbursement is more than

medical expenses .......... 13Itemized deductions ................ 9

LLaboratory fees ....................... 8

Lead-based paint removal ....... 8Learning disability .................... 8Legal fees ................................ 8Lifetime care ............................ 8Lodging .................................... 8

Long-term care contracts ........ 8

MMaternity clothes ..................... 9Meals ....................................... 9

Medical information plan ......... 9Medical savings accounts ....... 9

Medicare .................................. 7Medicines ................................ 9

Mentally retarded, special homefor ......................................... 9

NNursing home ........................ 10

Nursing services (See alsoLong - term care contracts) . 10

OOperations ............................. 10

Optometrist (SeeEyeglasses) Organ donors (SeeTransplants)

Osteopath .............................. 10Oxygen .................................. 10

PParking fees and tolls:

Medical ............................... 12Patterning exercises .............. 11

Personal use items ................ 10Prosthesis (SeeArtificial limb) Psychiatric care (See also

Psychoanalysis) ................... 10Psychoanalysis ...................... 10Psychologist .......................... 11

Publications (SeeMoreinformation)

SSale of medical property ....... 14Schools and education,

special ................................ 11Self-employed persons ............ 7

Settlement of damage suit .... 15Sick leave ................................ 7

Spouse's medical expenses .... 2Sterilization ............................ 11Stop-smoking program .......... 11

Surgery (SeeOperations) Swimming lessons (SeeDancing

lessons)

TTax form .................................. 2

Form 1040X ......................... 2Tax help ................................. 16Telephone .............................. 11Television .............................. 11Therapy ................................. 11Transplants ............................ 11Transportation ....................... 11

Trips (See alsoLodging) ......... 12TTY/TDD information ............ 16Tuition .................................... 12

WWeight loss program ............. 12

Wheelchair ............................. 12

XX-ray fees .............................. 12

Page 18


19/19

Tax Publications for Individual Taxpayers

General Guides

Your Rights as a TaxpayerYour Federal Income Tax (ForIndividuals)Farmers Tax GuideTax Guide for Small BusinessTax Calendars for 2000Highlights of 1999 Tax Changes

Guide to Free Tax Services

Specialized Publications

Armed Forces Tax GuideFuel Tax Credits and RefundsTravel, Entertainment, Gift, and CarExpensesExemptions, Standard Deduction,and Filing InformationMedical and Dental Expenses

Child and Dependent Care ExpensesDivorced or Separated IndividualsTax Withholding and Estimated TaxTax Benefits for Work-RelatedEducationForeign Tax Credit for IndividualsU.S. Government Civilian EmployeesStationed AbroadSocial Security and OtherInformation for Members of theClergy and Religious WorkersU.S. Tax Guide for AliensScholarships and FellowshipsMoving ExpensesSelling Your HomeCredit for the Elderly or the DisabledTaxable and Nontaxable IncomeCharitable Contributions

Residential Rental Property

Commonly Used Tax Forms

Miscellaneous Deductions

Tax Information for First-TimeHomeownersReporting Tip IncomeSelf-Employment Tax

Depreciating Property Placed inService Before 1987Installment SalesPartnershipsSales and Other Dispositions ofAssetsCasualties, Disasters, and Thefts(Business and Nonbusiness)Investment Income and ExpensesBasis of AssetsRecordkeeping for IndividualsOlder Americans Tax GuideCommunity PropertyExamination of Returns, AppealRights, and Claims for RefundSurvivors, Executors, andAdministratorsDetermining the Value of Donated

PropertyMutual Fund DistributionsTax Guide for Individuals WithIncome From U.S. PossessionsPension and Annuity IncomeCasualty, Disaster, and Theft LossWorkbook (Personal-Use Property)Business Use of Your Home(Including Use by Day-CareProviders)Individual Retirement Arrangements(IRAs) (Including Roth IRAs andEducation IRAs)Tax Highlights for U.S. Citizens andResidents Going AbroadUnderstanding the Collection ProcessEarned Income Credit (EIC)Tax Guide to U.S. Civil Service

Retirement Benefits

Tax Highlights for Persons withDisabilitiesBankruptcy Tax Guide

Direct SellersSocial Security and EquivalentRailroad Retirement BenefitsHow Do I Adjust My Tax Withholding?Passive Activity and At-Risk RulesHousehold Employers Tax GuideTax Rules for Children andDependentsHome Mortgage Interest DeductionHow To Depreciate PropertyPractice Before the IRS and Powerof AttorneyIntroduction to Estate and Gift TaxesIRS Will Figure Your Tax

Per Diem RatesReporting Cash Payments of Over$10,000The Taxpayer Advocate Service ofthe IRS

Derechos del ContribuyenteCmo Preparar la Declaracin deImpuesto Federal

Crdito por Ingreso del TrabajoEnglish-Spanish Glossary of Wordsand Phrases Used in PublicationsIssued by the Internal RevenueService

U.S. Tax Treaties

Spanish Language Publications

Tax Highlights for CommercialFishermen

910

595553509334225

171

3378463

501

502

503504505508

514516

517

519520521523524525526

527529

530

531533

534

537

544

547

550551552554

541

555556

559

561

564570

575584

587

590

593

594596721

901907

908

915

919925926929

946

911

936

950

1542

967

1544

1546

596SP

1SP

850

579SP

Comprendiendo el Proceso de Cobro594SP

947

Tax Benefits for Adoption968

Informe de Pagos en Efectivo en

Exceso de $10,000 (Recibidos enuna Ocupacin o Negocio)

1544SP

See How To Get More Information for a variety of ways to get forms, including by computer,fax, phone, and mail. For fax orders only, use the catalog numbers when ordering.

U.S. Individual Income Tax ReturnItemized Deductions & Interest andOrdinary Dividends

Profit or Loss From BusinessNet Profit From Business

Capital Gains and Losses

Supplemental Income and LossEarned Income Credit

Profit or Loss From Farming

Credit for the Elderly or the Disabled

Income Tax Return for Single andJoint Filers With No Dependents

Self-Employment TaxU.S. Individual Income Tax Return

Interest and Ordinary Dividends forForm 1040A FilersChild and Dependent CareExpenses for Form 1040A FilersCredit for the Elderly or theDisabled for Form 1040A Filers

Estimated Tax for IndividualsAmended U.S. Individual Income Tax Return

Unreimbursed Employee BusinessExpenses

Underpayment of Estimated Tax byIndividuals, Estates, and Trusts

Power of Attorney and Declarationof Representative

Child and Dependent Care Expenses

Moving ExpensesDepreciation and AmortizationApplication for Automatic Extension of TimeTo File U.S. Individual Income Tax ReturnInvestment Interest Expense DeductionAdditional Taxes Attributable to IRAs, OtherQualified Retirement Plans, Annuities,Modified Endowment Contracts, and MSAsAlternative Minimum TaxIndividualsNoncash Charitable Contributions

Change of AddressExpenses for Business Use of Your Home

Nondeductible IRAsPassive Activity Loss Limitations

1040Sch A & B

Sch CSch C-EZSch D

Sch ESch EIC

Sch FSch H Household Employment Taxes

Sch RSch SE

1040EZ

1040ASch 1

Sch 2

Sch 3

1040-ES1040X

2106 Employee Business Expenses2106-EZ

2210

24412848

390345624868

49525329

6251828385828606

88228829

Form Number and TitleCatalogNumber

Sch J Farm Income Averaging

Additional Child Tax Credit8812

Education Credits8863

CatalogNumber

1170020604

11744

1186211980

124901290613141

1317713329

1360062299637046396610644120811323225379

11320

Form Number and Title

11330

113341437411338

1134413339

11346121872551311359113581132712075

10749

12064

11329

1134011360

See How To Get More Information for a variety of ways to get publications,including by computer, phone, and mail.

970 Tax Benefits for Higher Education971 Innocent Spouse Relief

Sch D-1 Continuation Sheet for Schedule D 10424

972 Child Tax Credit

Documents

US Internal Revenue Service: p502--1999