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IRS Issues 2020 Version of Publication 502 on Medical and Dental Expenses

EBIA  

EBIA  

IRS Publication 502 (Medical and Dental Expenses (for 2020 Returns))

Available at https://www.irs.gov/pub/irs-prior/p502–2020.pdf

The IRS has released an updated version of Publication 502 for the 2020 tax year. Publication 502 describes the medical expenses that are deductible by taxpayers on their federal income tax returns. The 2020 version is substantially similar to its 2019 counterpart. Relevant dollar amounts (e.g., the standard mileage rate for use of an automobile to obtain medical care) have been revised to reflect their 2020 inflation-adjusted values.

EBIA Comment: Publication 502 provides valuable guidance on what qualifies as a medical expense under Code § 213(d), and thus helps identify the expenses that may be reimbursed or paid by health FSAs, HSAs, or HRAs, or covered on a tax-favored basis under other group health plans (e.g., employer-sponsored medical plans). But Publication 502 should be used with caution in connection with these benefits because it addresses the deductibility of medical expenses for individuals—it does not account for differences in the rules for reimbursing expenses under health FSAs, HSAs, or HRAs. For more information, see EBIA’s Cafeteria Plans manual at Sections XX.D.7 (“Other Guidance Regarding What Is Medical Care: Caution Regarding IRS Publication 502”), XX.D.8 (“Distinguishing Deductibility From Reimbursement of Medical Care Expenses (and Why It Matters)”), and XX.M (“Table of Common Expenses, Showing Whether They Are for ‘Medical Care’”). See also EBIA’s Consumer-Driven Health Care manual at Sections XV.B (“HSA Distributions Are Tax-Free If for Qualified Medical Expenses”) and XXIV.B (“HRAs May Reimburse Only Code § 213(d) Expenses”), and EBIA’s Self-Insured Health Plans manual at Section VI.B.1 (“Only Code § 213 Medical Care Receives Favorable Tax Treatment”). You may also be interested in our upcoming webinar “FSA Relief Under the Consolidated Appropriations Act, 2021” (live on 2/3/2021).

Contributing Editors: EBIA Staff.

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