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The Money Mom: Tax Deductions for Weight Loss

tight insuranceLast week, I was on Today with Madelyn Fernstrom, the show’s Diet and Nutrition Editor.  Seems like an odd pairing, but this time of year, it’s certainly not – did you know you can turn your weight loss into a tax break?

It’s true.  In April of 2002, the IRS designated obesity as a disease, and with that designation comes some tax deductions.  Now, tax payers can write off weight loss expenses, as long as they’re for health improvement.

You may be thinking that all weight loss is for health improvement, but it goes a bit deeper than that – your doctor must recommend the weight loss as a way to counteract a medical issue, and the IRS wants to see proof.  Weight loss to combat high blood pressure, heart disease, bad knees and high cholesterol will get you a tax savings; losing those last ten pounds will not.

Here are the rules you need to know:

You can’t deduct your gym membership, home exercise equipment, diet foods, over-the-counter weight loss products (like Alli), nutritional supplements or vitamins, or services that are already paid for by your insurance when you have a co-pay.

You can deduct behavioral and nutritional counseling, and fees associated with community, physician or hospital-based weight loss programs, which often give you a diet and fitness plan, menus, and group support.  You can also deduct weight loss surgery, like gastric bypass (which runs around $25,000), and FDA-approved prescription weight loss drugs.

You can only take the deduction once your expenses exceed 7.5 percent of your adjusted gross income.  That means if your AGI is $40,000 a year, you can write off deductible medical expenses – not just weight loss related, but also out-of-pocket costs like dental and eye care – once they exceed a combined $3,000.  That sounds like a high hurdle, and it is, so plan accordingly to try to bunch your expenses within a single year.

Note:  One up side to the lay-offs and salary deductions we saw in 2009 is that it’s easier to hit this mark.  But if you can’t, and you have a flexible spending account through your employer, you’re able to set aside money pre-tax that can be used for these same expenses.  Many flexible spending accounts also allow over the counter drug purchases, so you may be able to use those dollars for non-prescription weight loss drugs and supplements as well. Ask your human resources department or benefits provider for specifics.

Bottom line?  If you’re losing weight, you’re doing it for the health benefits, not the tax deduction. But go ahead and get documentation from your doctor.  That way, you’ll have it in hand if you’re eligible for a deduction, or if you want to use flexible spending dollars.  And remember that even if your weight loss isn’t deductible, you’ll save money when you shed pounds.  A recent study from the Centers for Disease Control and Prevention found that obese patients spent an average of $1,429 more for their medical care than people in a normal weight range.

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