Are the costs of FFS tax deductible? I've read a few articles stating that they are but I'd like to hear from those who have any experience with this. Thanks.

Quote from: JenJen2011 on April 16, 2012, 12:51:54 PM
Are the costs of FFS tax deductible? I've read a few articles stating that they are but I'd like to hear from those who have any experience with this. Thanks.

Ask a tax professional. I would guess if you have a "hormone letter" they should be.. Even without I doubt that would be a problem.

As I was writing the current series of daily tax tips on medical deductions I became aware of a recent court decision.

Rhiannon O'Donnabhain, who was born male, had a sex-change operation and claimed a tax deduction on Schedule A for the costs of the gender reassignment surgery. The IRS denied the deduction, claiming the surgery was cosmetic and not medically necessary. The taxpayer sued the IRS.

Cosmetic or plastic surgery is deductible only if it is necessary to improve a deformity related to a congenital abnormality, an injury from an accident or trauma or a disfiguring disease. Elective face-lifts, hair and breast implants, botox injections, hair removal and liposuction are generally not deductible because they are cosmetic in nature.

Early this month, the tax court ruled in favor of the taxpayer in an 8-5-3 decision (O'Donnabhain v. Commissioner, 134 T.C. No. 4), determining that male-to-female gender reassignment surgery qualifies as a deductible medical expense because

   1. Gender identity disorder is a disease.
   2. The hormone therapy and sex reassignment surgery were for the treatment of the disease, and thus not "cosmetic surgery" excluded from the definition of deductible medical care.

O'Donnabhain could not deduct all of the costs of the sex change. The court held that the taxpayer's breast augmentation surgery was directed at improving her appearance and did not meaningfully promote the proper function of her body or treat disease and therefore was nondeductible cosmetic surgery.

http://www.mainstreet.com/article/moneyinvesting/taxes/tax-tips-plastic-surgery-deductible
2-17-2010

Jen, the poster above is linking SRS, not FFS. You might not have the same argument for facial surgery. Here's my stance. I can stand in court with big blown up pictures of myself and say to a jury "ok, imagine you are me, right? I just explained to you for three hours how and why I transitioned, right? So you see me here before you, right? Ok, THIS is a picture of me before surgery. Now, imagine me in the same clothes. Was I justified in spending the $ and asking for a tax deduction? What would you do if you were me?" and like put it back on them. Um, not that a jury would decide or anything.

With that said, I deducted FFS on my taxes, all like $34K of it (didn't include the housing stay, just the cost of procedures, hospital). I got audited the year after FFS, but not the year of. I also deduct electrolysis on my taxes, not so much anymore, but like $15K worth in the first 3 years of transition. I say go for it, but try to find a tax accountant who will support you, less likelihood of an audit on a preparer filed return with huge deductions

The current version of the WPATH Standards of Care lists FFS in the list of "Options for Psychological and Medical Treatment of Gender Dysphoria." It is included in the same bullet point as BA & lower surgery, at the top of p.10 in the PDF found on WPATH.org.

Surgery to change primary and/or secondary sex characteristics (e.g., breasts/chest, external and/or internal genitalia, facial features, body contouring);

Elsewhere in the document there is mention of differing opinions about whether it is strictly cosmetic. It's worth downloading the SOC and doing a word search.

That said, at least one BCBS insurance plan includes coverage of FFS. In other policies, most notably the passport regulations, the US federal govt has given authority to WPATH's SOC. I hope this helps. (I am not a CPA.)

Quote from: MeghanAndrews on April 17, 2012, 01:05:53 AM
Jen, the poster above is linking SRS, not FFS. You might not have the same argument for facial surgery. Here's my stance. I can stand in court with big blown up pictures of myself and say to a jury "ok, imagine you are me, right? I just explained to you for three hours how and why I transitioned, right? So you see me here before you, right? Ok, THIS is a picture of me before surgery. Now, imagine me in the same clothes. Was I justified in spending the $ and asking for a tax deduction? What would you do if you were me?" and like put it back on them. Um, not that a jury would decide or anything.

With that said, I deducted FFS on my taxes, all like $34K of it (didn't include the housing stay, just the cost of procedures, hospital). I got audited the year after FFS, but not the year of. I also deduct electrolysis on my taxes, not so much anymore, but like $15K worth in the first 3 years of transition. I say go for it, but try to find a tax accountant who will support you, less likelihood of an audit on a preparer filed return with huge deductions

That's true Meghan, but I think the rationale holds.  FFS for the MtF corrects a congenital defect caused by the wrong gonads.

It is not simply cosmetic.