Question

Harry and Ginny have a great marriage. Their personalities are compatible in every way. However, their gene combination seems to be susceptible to dark environmental influences, primarily autoimmune disorders. Their oldest daughter Katie has been diagnosed with Celiac disease—a type of autoimmune disorder—this means that Katie can’t eat the protein gluten, which is found in wheat and barley. Oats are also typically off limits for Katie even though they do not contain gluten, however, oats are stored in the same grain silos as wheat because they have different harvest season and the wheat dust contaminates the oats. Gluten triggers the body’s immune system to attack the villi in the intestinal track. The villi absorb the nutrients from food, this leads to chronic malnutrition. There is no cure for Celiac disease. The doctor has prescribed a strict gluten free diet since for Katie. Even food that is processed in the same plant as wheat is processed in must be avoided. Gluten free alternative breads, cereal, and flours are very expensive. This results in many individuals with celiac disease to each low-carb diets with high fruits and vegetables and protein.

Harry and Ginny’s second son, Jacob, has Type 1 Diabetes, another autoimmune disorder where the immune system attacks and destroys insulin-producing beta cells in the pancreas, making it impossible for the body to produce insulin. Jacob must inject insulin into his body each time he eats food so that his body can process carbohydrates (any food derived from grains as well as simple sugars and fruits). The doctor has prescribed insulin for Jacob and has also prescribed a relatively low-carb diet including high amounts of fresh fruits, vegetables, and some protein.

In the current tax year, total insulin and doctor visit costs were $3,800 for Jacob, after any insurance benefits. Harry and Ginny believe that their grocery bill is twice as high as it otherwise would be ($1,500 more) because of the diet that they try to maintain for Jacob (fresh fruits, vegetables, and proteins, low carbs).

The most expensive thing for Katie is just the high food prices because she cannot eat wheat. So a loaf of bread for Katie costs approximately 6 times more than a loaf of bread for the rest of the family. Harry and Ginny estimate that they spent an additional $1,000 on Katie’s certified gluten free food during the year, but don’t have any receipts.

What if any expenses can Harry and Ginny claim is itemized medical expenses?

What if any expenses can Harry and Ginny claim reimbursement for from their Health Savings Account?

Answer 1

Answer to the questions:

If any expenses that Harry and Ginny claim is itemized medical expenses:

In this case IRS provides that you can deduct qualified medical expenses that exceeds 7.5% of adjusted gross income for 2017 and 2018 (this limit of 7.5% increased to 10% for the tax year 2019). Since in this case it is provided that medical expenses is itemized. Itemizing requires that you not take standard deduction, so you should only claim the medical expenses deduction if your itemized deductions are greater than your standard deduction. The standard deduction for individual $12,000, for heads of households $18,000, and for married couples filling jointly is $ 24,000.

In this case Harry and Ginny incurred additional expenses $6,300 ($ 3,800+$ 1,500+$1,000) for insulin and doctor visits, grocery bill and gluten free food. If this is itemized as medical expenses than this is allowed as medical expenses in excess of 7.5% of adjusted gross income. However standard deduction limit is more than expenses incurred. So Harry and Ginny should claim standard deduction even if these expenses are itemized as medical expenses as it will more beneficial than claiming as medical expenses.

If any expenses that Harry and Ginny claim reimbursement for from their Health Saving Account.

As per provision of IRS any medical expenses for which you are reimbursed can not be deducted. In addition the IRS generally disallow expenses of purchase for general health such as vitamin and diet food, non prescription drugs (except insulin), nicotine products etc. in such a case you can get standard deduction prescribed by IRS for a tax year.