The IRS released an updated version of Publication 502- Medical and Dental Expenses- that should be used for filing 2018 tax returns. Publication 502 explains the itemized deduction for medical and dental expenses that may be claimed on Schedule A of Form 1040. It addresses what expenses, and whose expenses, a tax payer can and cannot include in figuring the medical expense deduction.
Many employers use Publication 502 as a reference for what expenses are eligible to be reimbursed from a health flexible spending account plan. The IRS requires that only medical expenses be reimbursed from a health FSA. Medical expenses are defined as the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body.
While Publication 502 is a very useful tool, some items in the publication are not eligible for reimbursement from a health FSA. For example, the publication identifies Insurance Premiums as medical expenses, but they are not eligible for reimbursement from a health FSA.
For a copy of Publication 502 applicable to 2018 tax filings, click here.