H&W: IRS Releases Publications 502 and 503 for 2013 Tax Returns

The IRS releases Publications 502 and 503 for use in preparing 2013 tax returns. Publication 502 lists the medical expenses that are deductible on a taxpayer’s 2013 return and Publication 503 covers the requirements necessary to claim the dependent care tax credit.

Several changes in Publication 502 for 2013 include:

• Tax payers can only deduct medical expenses that exceed 10% of their adjusted gross income. The percentage is 7.5% if the taxpayer or spouse was born before January 2, 1949. The percentage was 7.5% for all taxpayers last year.
• The standard mileage rate for use of an automobile to obtain medical care was increased to $.24 per mile.
• For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage.

Some employers use Publication 502 as a guide for determining what expenses may be reimbursed under a Health FSA, HRA or HSA. Employers should use caution in using these publications beyond determining what expenses are deductible. The rules for reimbursing expenses from a health FSA, HRA or HSA may be different than for deducting the expenses on one’s taxes. For example, under Publication 502 an expense may be deductible the year in which it was paid; however, a Health FSA may only reimburse an expense in the year in which it was incurred.