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What exactly are medical expenses?
Medical expenses, according to the tax law, are in principle extraordinary burdens and therefore deductible. Since 2011, the legislator has introduced obligations to provide evidence to take account of medical expenses, which can be claimed retrospectively. The prescription of a naturopath or doctor is therefore always mandatory. In the case of a scientifically unrecognized method of treatment, an official medical report is required or a certificate from a “medical service” of the respective health insurance company.
A special case before the BFH (Federal Fiscal Court)
It took place in a case from February 2018 at the Federal Fiscal Court regarding the question of whether medical expenses are deductibleare, an objection and a lawsuit. A wife died after a long illness and the husband had to bear a large amount of the funeral and medical expenses himself. He wanted to submit these costs as “extraordinary burdens” in his tax return. First, his health insurance had borne half of the costs and then in the following years a large part of the remaining costs. According to the current regulations, the remaining amount no longer exceeded the reasonable burden and the man was able to pay the funeral costs on the basis of the inheritance. In this case, the high costs did not lead to the desired tax reduction. After the husband lost an unsuccessful lawsuit and objection procedure, he appealed to the BFH.
The result of the Federal Fiscal Court
The Federal Fiscal Court decided that the recognized medical expenses of the husband in the disputed year were to be reduced by the health insurance payments received in the following years. In this case, the husband’s reasonable burdens in the area of medical expenses were constitutional and had to be deducted. It therefore makes sense to obtain thorough information from the wage tax assistance association or the respective tax advisor regarding deductible medical expenses, even in the case of reimbursements in the following year. In particular, the advisors of the wage tax assistance association can provide information to their members within the scope of the limited advisory authority (§ 4 No. 11 StBerG). The members are optimally advised as employees, civil servants or pensioners.
Medical expenses are part of the extraordinary burdens
In addition to the usual medical expenses, the most important extraordinary burdens also include expenses for dentures or glasses or funeral expenses. The taxpayer can save taxes if the calculated burden of these costs has been exceeded in individual cases. Proof of medical necessity is also required when deducting medical expenses as extraordinary expenses. The taxpayer must, for example, also comply with this obligation to provide proof in the case of life-threatening illnesses.
Conclusion:
Medical expenses are generally considered to be extraordinary expenses under tax law. In February 2018, the Federal Court of Justice issued a precise regulation regarding the deductibility of medical expenses for reimbursements in the following year. The taxpayer should seek advice on questions relating to medical expenses from a tax advisor or the respective tax assistance association. Individual tax advice is recommended in the case of medical expenses.
