December 30, 2019 - Douglas Myser

Part of genetic testing is medical care. In a redacted Private Letter Ruling the IRS has ruled that a portion of ancestry genetic testing (consisting of a DNA collection kit and health services) is medical care and hence, that portion of the costs of the services and kit is potentially deductible. The IRS left it to the taxpayer to allocate the costs of the services and kit among the medical and non-medical items and services he received. Code Sec. 213(a) allows a taxpayer to deduct expenses paid for medical care of the taxpayer to the extent the expenses exceed 10% of the taxpayer's adjusted gross income. Code Sec. 213(d)(1)(A) provides that "medical care" is for the diagnostic, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. Part of genetic testing is medical care.

Reg. Section 1.213-1(c)(1)(2) provides that medical care includes medical, laboratory, surgical, dental, and other diagnostic and healing services. However, IRS Code Sec. 262 and Reg. Section 1.213-1(c)(1)(6) prohibit taxpayers from deducting personal, family, or living expenses if the expenses do not fall within the Code Sec. 213 definition of medical care. An expenditure that is merely beneficial to the general health of an individual is personal and is not for medical care. When a university charges a student a lump sum fee that includes medical care as well as other expenses, the portion of the charge that is allocable to medical care is considered a proper medical expense deduction if there is a breakdown showing the amount of the fee that is allocable to medical care or such information is readily available from the university. Therefore, if non-medical items or services are provided, for purposes of IRS Code Sec. 213, the fee paid must be allocated between items and services that are medical care and those that are not medical care.

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