Medical Deductions

Certain expenses such as dancing lessons, swimming lessons, health club dues, spa dues, vitamins, diaper service, teeth whitening, marijuana, nonprescription nicotine and gum, and food purchased per  a weight loss program are generally not deductible even if recommended by a doctor. To be deductible, expenses must be for the diagnosis, cure, mitigation, treatment or prevention of disease or affecting any structure or function of the body. Expenses to improve general health are not deductible.

Document Your Tax Deductions

If you are audited by the IRS, it is up to you to prove that you had a valid deduction. How do you do that? You need to keep invoices and bills that you pay. I attach the voucher part of my checks to the paid invoice which shows the date of the check and check number. If you don't have computer checks, write the check number and date on the invoice and keep them in a folder for the current year and at least the prior 3 years. Keep all of your business credit card statements that detail what you were charged. Write on the statement the names and relationships of anyone you paid a meal for. Keep all of your bank statements as the charges from debit cards can document business expenses. Pay the bank to provide check images each month if possible. It is worth the extra money. Going back and trying to get check images from banks several years old is very difficult and expensive and sometimes impossible. Also don't pay tax deductible bills with cash. Use checks.

Tips on Calling the IRS

If you need to talk to an IRS agent, you can call 800-829-1040 which is the tax help line. Give yourself about 45 minutes to be on hold so have a good book nearby to pass the time. Once you get an agent, I have found them for the most part to be very courteous, professional, and eager to help. Don't call on Mondays or Fridays as those are usually busier days for them. If you want your CPA to handle a matter with the IRS, usually the CPA needs to get a signed power of attorney form from you before the IRS will talk to him or her.