Medical Deductions on Taxes for treatment of GID
Victory! On February 2, 2010, the U.S. Tax Court issued an important decision in O’Donnabhain v. Commissioner of Internal Revenue, ruling for the first time that treatment for gender identity disorder qualifies as medical care under the Internal Revenue Code, and is therefore deductible.
I'm surprised the whole city of Lincoln didn't hear me yesterday morning when I jumped up in the air and screamed after reading the above statement. I've been following the O'Donnabhain case for the past couple of years after discovering that I couldn't claim my medical expenses due to a ruling in 2005 that treatment for gender identity disorder (GID) was "cosmetic" and "elective" and not medically necessary. My heart sank the day my accountant sent me the letter stating that the 20,500 dollars of medical bills would not be deductible but I had a glimmer of hope when she added that if the Tax Court ruled differently, I could amend my taxes as long as it was within 3 years of the filing date.
Yesterday morning I contacted her at 7:55 am and she said, send me the stuff, and we'll take it from here, so I did.
I'm ecstatic by this news BUT if you have time, I'd suggest holding back before contacting your accountant per the suggestions of GLAD. I'm taking a risk by moving ahead, please read below.
What does this ruling mean for me and you?We aren't exactly out of the water yet. The GLAD public affairs team sent me this yesterday:
Yesterday, the U.S. Tax Court issued a ruling in the case that treatment for gender identity disorder (GID) qualifies as medical care under the Internal Revenue Code, and, therefore, provided there is adequate medical documentation, related expenses qualify for a medical deduction for federal income tax purposes.
(To see the decision go to: http://www.ustaxcourt.gov/InOpHistoric/ODonnabhain.TC.WPD.pdf) This is a very strong decision, recognizing the legitimacy of GID as a medical condition and that expenses for transition-related hormones and surgical procedures may be deductible.
We do not yet know whether this decision is final. The Internal Revenue Service (IRS) has the right to appeal this decision to the U. S. First Circuit Court. It may be several weeks before we know whether the IRS will appeal the decision.In the meantime, if you have had treatment for GID and are trying to decide whether you should claim its expenses as a medical deduction, here is some information that may help you to decide. We are, however, not able to provide specific legal advice, so we strongly recommend that you take this information to a tax expert—a CPA or tax attorney—who can assist you in making a decision.
Once our win in the O’Donnabhain case is finalized, it should make it easier for transgender people, who claim a medical deduction for transition-related expenses, to win a challenge to that deduction by the IRS. However, our win does not guarantee that every medical deduction for the treatment of GID will be allowed by the IRS. Medical deductions can always be audited and require that you have strong documentation from your care providers that the treatment is medically appropriate.
In our case, although most of the medical treatment Rhiannon O’Donnabhain received for GID was allowed, her breast surgery was not. The Court felt that she had obtained “normal” breasts through hormone treatment, and concluded that there was insufficient documentation by the doctors that this procedure was needed for the treatment of Rhiannon’s GID. So, the bottom line is to make sure that you have the strongest medical documentation possible for each part of the treatment for which you are claiming a medical deduction. If you are audited and your medical deduction is denied, you can pursue the same course Rhiannon did—file an appeal and, if you lose the appeal, file in tax court.
With regard to transition-related medical expenses incurred in previous tax years, the IRS allows you to file an amended return for up to three years from the date of your original filing. If you are close to reaching that point, you might consider filing an amended return before the deadline is passed even before our case is final. If the three year time limit has passed, you cannot file an amended return. If you are not close to that deadline, you might want to see whether our case is appealed before filing. Again, you should consult a tax expert about the best course of action for you to take.
If you have any questions about this, please contact GLAD’s Legal InfoLine at 800-455-GLAD (4523). If you live in any of the six New England states, GLAD can also provide you with referrals to tax attorneys.
To read more:
http://news.yahoo.com/s/bloomberg/20100203/pl_bloomberg/aqacvuseeas4
Posted by ryanscout1
at 10:43 AM CST