By: A.J. Cook

When Raymond and Dorothy Tso's son was diagnosed with cancer, they followed their Navajo traditions and called in Indian singers to perform healing ceremonies.

Their son died, however.

The New Mexico couple deducted as medical expenses the cost of the sings. This included baskets and buckskins used in the ceremonies and the singers' fees.

The Internal Revenue Service disallowed the deduction. But the Tax Court ruled the Tso family was in harmony with the spirit of the law and allowed most of the deductions. The judge rejected some amounts because they conflicted with trial evidence. For example, the return showed Tom Farley, the 106 year old medicine man, did five sings the second year. Farley had died the year before.

The Moral: Unusual medical deductions can be yours for a song.

It's not always clear what expenses are deductible. Payments for medical care to Christian Science practitioners, like Indian sings, are deductible, but a patient's room and board outside a hospital are usually nondeductible.

Myrtle P. Dodge, 78, of Beverly, Mass., couldn't care for herself so she moved to her daughter's home. The mother paid for room, board and her daughter's services as a nurse.

When Mrs. Dodge deducted these costs, the IRS dodged the issue saying the daughter wasn't a registered or licensed nurse. It's not that simple, said the judge. She could deduct her daughter's services but not room and board. The court said room and board outside a hospital or clinic are nondeductible.

The next case illustrates an exception to that rule. Daniel S.W. Kelly, an electrical engineer in Milwaukee, went to New York City on business. While there he suffered an attack of appendicitis and underwent surgery. Complications followed. He stayed in the hospital for seventeen days and was discharged then only because they needed the room. To monitor Kelly's condition, his doctor told him to stay in a nearby hotel. His wife and a licensed nurse changed his bandages and administered medication. After a week his doctor decided he could leave.

When Kelly appended the cost of the hotel and the meals as a deduction, the IRS attacked. The court, however, allowed the deduction; Kelly stayed in the hotel because his illness required it, not for pleasure.

The Moral: Convoluted tax laws can be sickening.

Planning Tip: A person is entitled to an itemized deduction for medical and dental expenses for the taxpayer, spouse and dependents when the total expenses exceeds 7.5 percent of adjusted gross income. Don't overlook any expenses. Payments for transportation to and from medical care are clearly deductible, and taxpayers have even gotten deductions for the following: acupuncture, childbirth preparation classes, language training for a dyslexic, a mattress prescribed for alleviation of arthritis pain, a wig to help overcome the mental discomfort of a disease and clarinet lessons which an orthodontist recommended for a child's teeth.

Now you can deduct certain costs of attending a medical conference.

A new Internal Revenue Service ruling approved deducting some expenses of a mother attending a medical conference related to her child's chronic disease. The theory of the ruling would also apply if she goes for her own illness.

The parent, on advice of her child's doctor, attended an out-of-town conference sponsored by a group that supports research and education. She went to some social functions, but that wasn't the trip's main purpose. Even though meals and lodging weren't allowed, the mother got a medical deduction for transportation and conference fees.

Another ruling, however, denied transportation and conference fees where the main purpose seemed less medical and more social.

The patient booked a passage on a cruise his doctor recommended where various medical experts were available. They provided services including instructions on managing the illness.

Because all services on board ship were available in the taxpayer's hometown, the IRS limited deductions to payments for reviewing records, performing tests and reporting to the patient's physician.

The favorable ruling is timely because today's fast pace medical research brings new answers almost daily. It can be important to have access to information a local physician can't always provide.

The ruling will save more taxes for some taxpayers than others. If you itemize medical expenses, it may have limited advantage. In general, you deduct itemized medical costs only to the extent unreimbursed expenses exceed 7.5 percent of adjusting gross income.

In some cases this would be no deduction at all. But if you have a medical savings account or if you participate in an employer health plan that pays expenses like these, the limitations don't apply. So if your transportation and conference fees were $1,000, the effect would be a $1,000 reduction in taxable income.

The Moral: Deductions for medical conferences are just what the doctor ordered.

A.J. Cook is a lawyer and CPA. His tax column appears weekly in numerous newspapers. Why isn't it published in your hometown newspaper? Ask its Business Editor to subscribe.

Copyright © 1987-2001 A.J. Cook All Rights Reserved
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Released 4-5-99 and 7-31-00