U.S. Tax Court Rules SRS Costs Tax Deductible

[Robyn]

Tax court OKs deduction for Mass. woman's sex change in potentially wide-ranging ruling
by Denise Lavoie   AP Legal Affairs Writer   February 2, 2010

http://www.baltimoresun.com/news/sns-ap-us-sex-change-taxes,0,6564126.story


BOSTON (AP) — The U.S. Tax Court ruled Tuesday that a Massachusetts woman should be allowed to deduct the costs of her sex-change operation, a decision that could have broad implications for transgender people.

[LordKAT]

About time something went the right way.

[EveMarie]

almost posted the same thing.

I was too excited to see that something of this nature was finally reaching us, tremendous implications indeed!

Now if only our HRT could be included also

[Dana Lane]

almost posted the same thing.

I was too excited to see that something of this nature was finally reaching us, tremendous implications indeed!

Now if only our HRT could be included also

HRT was included.
http://abcnews.go.com/Business/wireStory?id=9731645

The tax court said O'Donnabhain could deduct as a medical care expense the costs associated with treating her gender-identity disorder, including sex-reassignment surgery and hormone therapy. But the court said she could not deduct the costs of breast augmentation surgery because it found that she had achieved breast enhancement through hormone treatments.

[Julie Marie]

Maybe this will help make transgender a medical issue rather than a psychological issue.  Once that happens we can expect much of the phobia and therefore the prejudice and discrimination to begin to fade.  It will take time but this is a great step in the right direction.

[EveMarie]

OK I missed that, guess I read right over that mention.

Even if such surgery "is medically indicated ... it is an otherwise cosmetic procedure that does not 'treat' the mental disease," Gustafson wrote.

I can't even comment on this absurd notion, ignorant A** Hole comes to mind though...

[sarahb]

Perfect timing too! I am giving my tax guy all my information now and just gave him the total medical deduction amount for my FFS last year (and related costs like therapy, HRT, etc.). It's pretty much around the same amount as Ms. O'Donnabhain's was so I'm assuming I'll be getting a pretty good refund this year. I'm also going to deduct the costs of SRS this year on my 2010 tax return.

By the way, does this mean that we can also deduct the medical expenses in years prior? I have the other half of the FFS expenses I could deduct that were paid in 2008. It would be cool if we could submit a 1040X to amend prior years' tax returns for the medical expenses!

~Sarah

[tekla]

I doubt you can do a retroactive tax return, not without raising a lot of flags, plus that is sort of ex-post facto, which is frowned upon.  If I did that I would (well I do this anyway) have my taxes done by someone who is not only a CPA, but a lawyer, because a CPA alone can only provide 'expert testimony' in court, where a lawyer can actually defend you.

[Syne]

1040X would be the route to go and I would also look into having someone else do it for you, just to cover your butt.

I deducted mine but since the cost is relatively inexpensive in Thailand it did not raise any red flags. MOF my list of deductions, medical and otherwise, is below average for my area.

And I am glad that this case made it through. There were a number of naysayers, even in the T community, (and sadly, I about bought into that) when this case first came up that it is nice to see that it has helped us.

[Julie Marie]

Perfect timing too! I am giving my tax guy all my information now and just gave him the total medical deduction amount for my FFS last year (and related costs like therapy, HRT, etc.).

~Sarah

According to the court documents, only GRS and hormone treatment are deductible.  FFS and BA are not. 

We still need to work on that.

[Butterfly]

U.S. Tax Court registers pro-trans decision
Keen News Service
By Chuck Colbert
05 February, 2010


http://www.keennewsservice.com/2010/02/05/u-s-tax-court-registers-pro-trans-decision/


"It's incredibly big to have a statewide court setting a national precedent. This is the first time a court that has jurisdiction nationally has reached this conclusion."

Born a biological male, O'Donnabhain provided highly personal testimony during her trial in Boston in July 2007, detailing an experience of dissonance between her biological sex and gender identity, starting as early as age 8. O'Donnabhain said she felt like "a female trapped in a male body."

[myles]

Ok has anyone else tried this. My tax eprson said the deduction is capped based on your income. Anyone else run into this.
Thanks Myles

[mickie88]

Ok has anyone else tried this. My tax eprson said the deduction is capped based on your income. Anyone else run into this.
Thanks Myles

that sounds like a load of crap if you ask me!! and someboy who might possibly be transphobic and not want to do their job for you. what the hell does it matter what your income is?? if i donate a car to charity, should it matter how much i make a year how much i get back because if my income?? NO!! it supposed to be based on the value of the car!! the value of surgery and HRT are what should come in to play, not your income!! i'm no tax genius, and I'm sure somehow some way that it works the opposite way of my thinking, everything usually does!!...grrrrrrrrrrrr

[Julie Marie]

Ok has anyone else tried this. My tax eprson said the deduction is capped based on your income. Anyone else run into this.
Thanks Myles

My tax guy took all my GRS and hormone expenses and added them to the exemptions.  I filed and have received my tax refund - no problem.

[Arch]

Ok has anyone else tried this. My tax eprson said the deduction is capped based on your income. Anyone else run into this.

Since they are health expenses, the amount that you can deduct is based on your income. Any health costs over 7.5% of your AGI can be deducted. Check it out--the basic info is in the tax booklet.
Post Merge: April 13, 2010, 02:58:05 PM

I doubt you can do a retroactive tax return, not without raising a lot of flags, plus that is sort of ex-post facto, which is frowned upon.  If I did that I would (well I do this anyway) have my taxes done by someone who is not only a CPA, but a lawyer, because a CPA alone can only provide 'expert testimony' in court, where a lawyer can actually defend you.

The IRS gets amended returns all the time. I once did retroactive returns for three years' worth of returns because I found out I qualified for an education credit that I didn't think I could take. I never ran into any problems. However, I assume that such returns are carefully scrutinized if they put more money into the taxpayer's pocket...

[myles]

Ok Arch this makes sense. She said that would be anything over 8K and top surgery was not much over that. So she came at it from exactly how you explained it. So I guess one of those situations where the more you make then less is deductible.
Thanks!
Myles

[Arch]

Ok Arch this makes sense. She said that would be anything over 8K and top surgery was not much over that. So she came at it from exactly how you explained it. So I guess one of those situations where the more you make then less is deductible.
Thanks!
Myles

Unfortunately, my ex makes quite a lot of money, so we had to factor out the 7.5% and then still have enough medical expenses to exceed the standard deduction for married filing jointly. We had it, but just barely. Once we started throwing in other, smaller medical expenses and premiums and mileage and stuff, it began to add up.

[myles]

My SO's company also paid all our medical insurance, deductibles and pretty much everything except my surgery. In the end there was no way we could reach the mount needed. If she could have just made less money, but then I would not have been able to pay for surgery so in the end I can;t complain.
Myles

[Arch]

My SO's company also paid all our medical insurance, deductibles and pretty much everything except my surgery. In the end there was no way we could reach the mount needed. If she could have just made less money, but then I would not have been able to pay for surgery so in the end I can;t complain.
Myles

Funny how people sometimes wish they had made less money.

I kept telling my then-partner that he wasn't having enough tax withheld, but he didn't listen to me. One year I discovered that he had claimed the wrong status for exemptions, and I don't think he ever fixed it. So to avoid a huge tax bill, I started having an extra $500 taken out of my own paycheck, which was already pitifully small.

When he decided to divorce me and we separated our finances, I stopped having that money withheld because I was having a hugely disproportionate amount taken out of my check. I told him he had better check his status and compensate.

Once again he didn't listen, of course. Because he makes so much money but didn't have enough tax taken out, we owe the state big time. If we hadn't itemized all of those medical expenses, we would have owed the feds a lot more, too.

Now he suddenly gets it and realizes that he should have checked his withholding.

[BrandiOK]

Keep in mind (and this is something I've run into the last several years) that, yes, any medical costs over 7.5% of your AGI (adjusted gross income) are deductible BUT....that doesn't mean it will be deducted.  You first have to exceed the standard deduction amount that everyone gets.  Even if you are eligible for the deduction it will NOT be deducted unless you top the standard deduction. 

In my case I was well over my 7.5% of AGI but got zero deductions for medical cost because it was still lower than the standard deduction.  So, essentially, the whole "7.5% of AGI" rule is pointless for most people unless they are paying their medical costs (more than $5,600 avg.) out of pocket each year and who can afford that?  In the case of SRS/GRS and such, assuming you paid the full cost out of pocket AND had a 7.5% of AGI that was less than the cost of the surgery you could get a deduction.  How much depends on your income.

Medical cost deductions are a bit of a joke because it really takes a much larger "out of pocket" expenditure than most blue collar workers can afford just to qualify for them.  Which kind of sucks because the people who need the deductions the most are the same ones who don't qualify for them.

Edited: This is all assuming you don't have other deductions that you itemized that put you over the standard deduction amount.  If that's the case then anything over the 7.5% of AGI will count as a deduction.  Sorry if it's confusing.