Breastfeeding is tax deductible!

[robbase]

parenting.blogs.nytimes.com/2011/02/11/the-irs-breast-pumps-and-other-updates/

discuss

[Gardening Grandma]

From the link:
In a letter written on Jan. 31 but released Thursday afternoon, the agency’s commissioner David H. Shulman noted that because pumps are used “for the purpose of affecting a structure or function of the body of the lactating woman,” they are properly classified as a medical device. Previously the IRS held the position that, as my colleague David Kocieniewski put it in today’s Business section, “viewed breast milk as nothing more than a healthy food — meaning that breast pumps, bottles and pads were no more deserving of a tax break than a vegetable steamer.”

I don't have a problem with breast pumps being tax deductible. I never had one, but if they make it possible for a working mum to continue breast feeding, more power to her.

[phil5185]

pumps are used “for the purpose of affecting a structure or function of the body of the lactating woman,”

Wow, sounds really important when a bureaucrat says it - we just used them to get the milk out of the boobs for our babies.

[Deleted]

Feb 12, 2011 13:24:01 GMT -5 phil5185 said:

pumps are used “for the purpose of affecting a structure or function of the body of the lactating woman,”

Wow, sounds really important when a bureaucrat says it - we just used them to get the milk out of the boobs for our babies.

or to provide pleasure


But hey, I don't see why not

[Plain Old Petunia]

The IRS is very lenient and accomodating when defining "medical" expenses. But let's not forget, to write off your medical expenses you must:

1. Itemize
2. Get over a 7.5% floor.

Unless you have substantial out-of-pocket medical expenses, you won't get a dime of tax benfit.

[mesquite77]

Feb 12, 2011 14:06:08 GMT -5 Plain Old Petunia said:

Unless you have substantial out-of-pocket medical expenses, you won't get a dime of tax benfit.

Or you could use a flexible spending account.

[Plain Old Petunia]

Yes, if you have one, you certainly could.

[phil5185]

Or you could use a flexible spending account.

Yeah - but that only saves about 15%, you have to pay 85% of the bill yourself.

[Deleted]

Feb 12, 2011 15:01:31 GMT -5 phil5185 said:

Or you could use a flexible spending account.

Yeah - but that only saves about 15%, you have to pay 85% of the bill yourself.

Better than getting nothing, if your medical expenses don't exceed 7.5% of your AGI.

[schildi]

Feb 12, 2011 14:06:08 GMT -5 Plain Old Petunia said:

The IRS is very lenient and accomodating when defining "medical" expenses. But let's not forget, to write off your medical expenses you must:

1. Itemize
2. Get over a 7.5% floor.

Unless you have substantial out-of-pocket medical expenses, you won't get a dime of tax benfit.

Or have an HSA.

[whoisjohngalt]

There are much more worse things to make tax deductible than breast pumps.

I have one of the more expensive ones and even if I was able to deduct the entire cost, it would probably save me a few bucks at most, so who cares?

Lena

[phil5185]

Or have an HSA.

Still leaves you with 85% of the bill.

[schildi]

Feb 12, 2011 17:01:30 GMT -5 phil5185 said:

Or have an HSA.

Still leaves you with 85% of the bill.

Why is that, Phil? My marginal tax rate is > 15%, and the $6,150 or so I can contribute is pre-tax. How come you are saying it's only 15% "off"?

[mesquite77]

Yeah, I don't follow your point phil.

The flex plan money comes out pre-tax saving us 15% Fed, 5% state, and 7.65% FICA.

[schildi]

Feb 12, 2011 18:21:38 GMT -5 mesquite77 said:

Yeah, I don't follow your point phil.

The flex plan money comes out pre-tax saving us 15% Fed, 5% state, and 7.65% FICA.

Yeah, looking at my W2-breakdown, my $6,150 HSA contribuition is taken off all 3: federal, SS and medicare wages. So it saved me 25% on federal tax, 1.45% on medicare tax and 0% on SS tax (since we were over the limit).

Phil, please come back, what are we missing?

[schildi]

Actually, it's even a little better: Since I got my taxes all done in TT and already filed, it was easy to check the HSA impact. I went in and added the $6,150 to my wages (which is exactly what would have happened without the HSA). It increase my tax liability by $1,837 because it also reduced the child tax credit by $300. So $1,837 = $6,150 * 25% + $300. That's 30% off federal taxes alone.

Phil, please don't let us hanging here! What did I do wrong with my taxes, I already filed!

[schildi]

Phil?

[schildi]

Phi-hil!
Hope everything's ok, have not seen any posts by you in the last couple days.

Does anybody else know why Phil is saying the HSA only saves 15%? Usually Phil knows this stuff, so I think there must be some truth to this.

[pepper112765]

Feb 12, 2011 15:01:31 GMT -5 phil5185 said:

Or you could use a flexible spending account.

Yeah - but that only saves about 15%, you have to pay 85% of the bill yourself.

An FSA reimburses 100% of out-of-pocket qualified medical expenses. Well at least mine does. My FSA is linked to a debit card ... I have to substantiate what was charged but I don't have to come out of pocket at most providers that accepts MasterCard.

[thyme4change]

An FSA reimburses 100% of out-of-pocket qualified medical expenses.

Yes, but don't you have to put money INTO the FSA.

Either deductible or flex-spending, your stuff isn't free - it is just the ultimate cost is reduced by whatever your marginal tax rate is.

[pepper112765]

Feb 14, 2011 11:36:28 GMT -5 thyme4change said:

An FSA reimburses 100% of out-of-pocket qualified medical expenses.

Yes, but don't you have to put money INTO the FSA.

Either deductible or flex-spending, your stuff isn't free - it is just the ultimate cost is reduced by whatever your marginal tax rate is.

Yes, I do. I put in 3000 a year and my employer contributes 1400. I wasn't trying to say it was free... Nothing is free. I was responding to the 15%/85% comment, but later saw they were referencing HSAs.

[schildi]

All I was wondering is why Phil kept on saying 85%/15%, when I am sure I saved > 30% by using an HSA vs. post tax money.

[thyme4change]

Maybe 15% is most likely?

I'm pretty sure Phil understand the tax brackets - so I think he was using 15% as an example.

[schildi]

Feb 14, 2011 11:57:26 GMT -5 thyme4change said:

Maybe 15% is most likely?

I'm pretty sure Phil understand the tax brackets - so I think he was using 15% as an example.

I don't know. See what Phil said below, that sounds pretty strong, not like an "example". But then, Phil also says a new car loses $25,000 value or so in three years, which is a gross generalization as well. So maybe you are right.

Feb 12, 2011 17:01:30 GMT -5 phil5185 said:

Or have an HSA.

Still leaves you with 85% of the bill.

[phil5185]

why Phil kept on saying 85%/15%, when I am sure I saved > 30% by using an HSA vs. post tax money.

My main point was that you pay the lion's share of your medical bill, whether it is 70% or 85%, or something in between - posters were talking as if the HSA was paying their whole bill, similar to insurance.

[schildi]

Feb 14, 2011 12:06:26 GMT -5 phil5185 said:

why Phil kept on saying 85%/15%, when I am sure I saved > 30% by using an HSA vs. post tax money.

My main point was that you pay the lion's share of your medical bill, whether it is 70% or 85%, or something in between - posters were talking as if the HSA was paying their whole bill, similar to insurance.

Oh, ok. Thanks Phil for coming back and clarifying!
No, I never thought somebody picked up the bill. But 30% savings on something you need to pay anyway sounds good to me.
The point was that somebody claimed "not a dime of tax benefit" unless you go over that IRS limit, when in fact, we saved almost $2,000 because of the HSA starting with the first $ spent. This was not about HSA money being free money.
BTW, the $1,837 tax savings is almost half of our max out of pocket medical cost for last year, and with $0 monthly premium, it's almost half of our max (worst case) medical cost for the year.
I like that now we can also save the 30% on dental bills and co-payments. The HSA is a nice benefit imo.

[Frugal Nurse]

Feb 12, 2011 14:06:08 GMT -5 Plain Old Petunia said:

The IRS is very lenient and accomodating when defining "medical" expenses. But let's not forget, to write off your medical expenses you must:

1. Itemize
2. Get over a 7.5% floor.

Unless you have substantial out-of-pocket medical expenses, you won't get a dime of tax benfit.

If you had a baby and bought the breast pump in the same year (which is pretty much a given) then your out of pocket medical expenses are very likely high enough to claim the deduction, unless you are on medicaid or have an awesome insurance plan.

[Deleted]

When I had my kids, my only out of pocket costs were my $10 copays per visit, up to a max of $100. I had my kids in a birth center so there were no other costs, the midwife/freestanding birth center were a package deal. So my breast pump cost more than the pregnancy/delivery. Unless you have really crappy insurance, very low income, or problems with delivery, I don't think many births woud have out of pocket costs exceeding 7.5% of AGI.

[Deleted]

Feb 14, 2011 12:38:02 GMT -5 @singlemominmd said:

Unless you have really crappy insurance, very low income, or problems with delivery, I don't think many births woud have out of pocket costs exceeding 7.5% of AGI.

Yeah, it takes a pretty catastrophic medical problem relative to your income before you get any tax breaks. I like the fact that it's reimbursable in an HSA or FSA, though. We have a "use it or lose it" FSA and sometimes at the end of the year you're casting about for things to do with the money so you don't leave it on the table. DH and I got prescription sunglasses one year. This is just one more thing you can get reimbursed.

[schildi]

Feb 14, 2011 15:18:58 GMT -5 @athena53 said:

Feb 14, 2011 12:38:02 GMT -5 @singlemominmd said:

Unless you have really crappy insurance, very low income, or problems with delivery, I don't think many births woud have out of pocket costs exceeding 7.5% of AGI.

Yeah, it takes a pretty catastrophic medical problem relative to your income before you get any tax breaks. I like the fact that it's reimbursable in an HSA or FSA, though. We have a "use it or lose it" FSA and sometimes at the end of the year you're casting about for things to do with the money so you don't leave it on the table. DH and I got prescription sunglasses one year. This is just one more thing you can get reimbursed.

This is why I like the HSA: it rolls over, no wasted money, or need to spend money in a hurry.