Example. Taxpayer H, married to W and having one dependent child, had adjusted gross income for 1956 of $3,000. During 1956 he paid $300 for medical care, of which $100 was for treatment of his dependent child and $200 for an operation on W which was performed in September 1955. In 1956 he received a payment of $50 for health insurance to cover a portion of the cost of W's operation performed during 1955. The deduction allowable under section 213 for the calendar year 1956, provided the taxpayer itemizes his deductions and does not compute his tax under section 3 by use of the tax table, is $160, computed as follows:
Payments in 1956 for medical care | $300 |
Less: Amount of insurance received in 1956 | 50 |
Payments in 1956 for medical care not compensated for during 1956 | 250 |
Less: 3 percent of $3,000 (adjusted gross income) | 90 |
Excess, allowable as a deduction for 1956 | 160 |
Payments for medical care of H and W in 1956 | $5,000 | |
Payments for medical care of the dependent in 1956 | $3,000 | |
Less: 3 percent of $40,000 (adjusted gross income) | 1,200 | |
---- | 1,800 | |
Allowable deduction for 1956 | 6,800 |
Hospital and doctor bills-for D and E | $6,500 | |
Hospital and doctor bills-for F | 4,850 | |
Medicine and drugs-for D and E | $225 | |
Medicine and drugs-for F | $225 | |
Total medicine and drugs | 450 | |
Less: 1 percent of adjusted gross income ($30,000) | 300 | |
Allowable expenses for medicine and drugs | $150 | |
Total medical expenses taken into account | 11,500 |
Since an exemption cannot be claimed for F on the 1962 return of D and E, their deduction for medical expenses (assuming that section 213(g) does not apply) is limited to $10,000 for that year ($5,000 multiplied by the two exemptions allowed for D and E under section 151(b)). If these identical facts had occurred in a taxable year beginning before January 1, 1962, the medical expense deduction for D and E would, for such taxable year, be limited to $5,000 ($2,500 multiplied by the two exemptions allowed for D and E under section 151(b)). See paragraph (c) of this section.
Medical expenses per Example 3 | $11,500 | |
Add: Expenses paid for G | $4,800 | |
Less: 3 percent of adjusted gross income ($30,000) | 900 | |
---- | 3,900 | |
Total medical expenses taken into account | 15,400 | |
Maximum deduction for 1962 ($5,000 multiplied by 3 exemptions) | 15,000 | |
Medical expenses not deductible | 400 |
Hospital and doctor bills-for D and E | $6,500 |
Hospital and doctor bills-for F | 4,350 |
Medicine and drugs-for D and E | 225 |
Medicine and drugs-for F | 225 |
Total medical expenses taken into account | 11,800 |
Example. H and W made a joint return for the calendar year 1967. The adjusted gross income of H and W for 1967 was $10,000 and they paid in such year $370 for medical care of which amount $350 was paid for insurance which constitutes medical care for H and W. No part of the payment was for medicine and drugs or was compensated for by insurance or otherwise. The allowable deduction under section 213 for medical expenses paid in 1967 is $150, computed as follows:
(1) Lesser of $175 (one-half of amounts paid for insurance) or $150 | $150 | ||
(2) Payments for medical care | $370 | ||
(3) Less line 1 | 150 | ||
(4) Medical expenses to be taken into account under 3-percent limitation (line 2 minus line 3) | $220 | ||
(5) Less: 3 percent of $10,000 (adjusted gross income) | 300 | ||
(6) Excess allowable as a deduction for 1967 (excess of line 4 over line 5) | 0 | ||
(7) Allowable medical expense deduction for 1967 (line 1 plus line 6) | $150 |
Example. The taxpayer, a single individual with no dependents, had an adjusted gross income of $6,000 for the calendar year 1956. During 1956, he paid a doctor $300 for medical services, a hospital $100 for hospital care, and also spent $100 for medicine and drugs. These payments were not compensated for by insurance or otherwise. The deduction allowable under section 213 for the calendar year 1956 is $260, computed as follows:
Payments for medical care in 1956:
Doctor | $300 | |
Hospital | 100 | |
Medicine and drugs | $100 | |
Less: 1 percent of $6,000 (adjusted gross income) | 60 | 40 |
Total medical expenses taken into account | 440 | |
Less: 3 percent of $6,000 (adjusted gross income) | 180 | |
Allowable deduction for 1956 | 260 |
Example. H and W, who have a dependent child, made a joint return for the calendar year 1956. H became 65 years of age on September 15, 1956. The adjusted gross income of H and W for 1956 is $10,000. During the year, H and W paid the following amounts for medical care:
H and W: | |||
Payments for doctors and hospital | $1,000.00 | ||
Payments for medicine and drugs | $180.00 | ||
Less: Limitation for medicine and drugs (see computation below) | 56.25 | 123.75 | |
Medical expenses for H and W to be taken into account | 1,123.75 | ||
Dependent: | |||
Payments for doctors and hospital | 500.00 | ||
Payments for medicine and drugs | $140.00 | ||
Less: Limitation for medicine and drugs (see computation below) | 43.75 | 96.25 | |
Total medical expenses | 596.25 | ||
Less: 3 percent of $10,000 (adjusted gross income) | 300.00 | ||
Medical expenses for the dependent to be taken into account | 296.25 | ||
Allowable deductions for 1956 | 1,420.00 | ||
Payments for medicine and drugs: | |||
H and W | 180.00 | ||
Dependent | 140.00 | ||
Total payments | 320.00 | ||
Less: 1 percent of $10,000 (adjusted gross income) | 100.00 | ||
Payments to be taken into account | 20.00 | ||
Allocation of 1-percent exclusion: | |||
H and W (180 ÷ 320 * $100) | 56.25 | ||
Dependent (140 ÷ 320 * $100) | 43.75 | ||
Total | 100.00 |
H, W, and C: | |||
Payments for doctors and hospital | $950 | ||
Payments for medicine and drugs | $180 | ||
Less: 1 percent of $12,000 (adjusted gross income) | 120 | 60 | |
Total medical expenses | 1,010 | ||
Less: 3 percent of $12,000 (adjusted gross income) | 360 | ||
Medical expenses of H, W, and C to be taken into account | $650 | ||
M: | |||
Payments for doctors and hospitals | 400 | ||
Payments for medicine and drugs | 100 | ||
Medical expenses of M to be taken into account | 500 | ||
Allowable deduction for 1964 | 1,150 |
H and W: | |||
Payments for doctors and hospital | $600 | ||
Payments for medicine and drugs | 175 | ||
Medical expenses for H and W to be taken into account | $775 | ||
F: | |||
Payments for doctors and hospital | 700 | ||
Payments for medicine and drugs | 150 | ||
Medical expenses for F to be taken into account | 850 | ||
C: | |||
Payments for doctors and hospital | 200 | ||
Payments for medicine and drugs | $175 | ||
Less: 1 percent of $12,000 (adjusted gross income) | 120 | 55 | |
Total medical expenses | 255 | ||
Less: 3 percent of $12,000 (adjusted gross income) | 360 | ||
Medical expenses for C to be taken into account | 0 | ||
Allowable deduction for 1964. | 1,625 |
Payments for doctors and hospitals: | ||||
H | $400 | |||
W | 200 | |||
C | 200 | |||
F | 700 | |||
--- | $1,500 | |||
Payments for medicine and drugs: | ||||
H | 75 | |||
W | 100 | |||
C | 175 | |||
F | 150 | |||
-- | $500 | |||
Less: 1 percent of $12,000 (adjusted gross income) | 120 | 380 | ||
Medical expenses to be taken into account | $1,880 | |||
Less: 3 percent of $12,000 (adjusted gross income) | 360 | |||
Allowable medical expense deduction for 1967 | 1,520 |
Example. H and W made a joint return for the calendar year 1962 and were allowed five exemptions (exclusive of exemptions under sec. 151 (c) and (d)), one for each taxpayer and three for their dependents. The adjusted gross income of H and W in 1962 was $80,000. They paid during such year $26,000 for medical care, no part of which is compensated for by insurance or otherwise. The deduction allowable under section 213 for the calendar year 1962 is $20,000, computed as follows:
Payments for medical care in 1962 | $26,000 |
Less: 3 percent of $80,000 (adjusted gross income) | 2,400 |
Excess of medical expenses in 1962 over 3 percent of adjusted gross income | 23,600 |
Allowable deduction for 1962 ($5,000 multiplied by five exemptions allowed under sec. 151 (b) and (e) but not in excess of $20,000) | 20,000 |
For purposes of the preceding sentence, amounts will be considered payable for other than medical care under the contract if the contract provides for the waiver of premiums upon the occurrence of an event. In determining whether a separately stated charge for insurance covering expenses of medical care is unreasonably large in relation to the total premium, the relationship of the coverages under the contract together with all of the facts and circumstances shall be considered. In determining whether a contract constitutes an "insurance" contract it is irrelevant whether the benefits are payable in cash or in services. For example, amounts paid for hospitalization insurance, for membership in an association furnishing cooperative or so-called free-choice medical service, or for group hospitalization and clinical care are expenses paid for medical care. Premiums paid under Part B, title XVIII of the Social Security Act (42 U.S.C. 1395j - 1395w ), relating to supplementary medical insurance benefits for the aged, are amounts paid for insurance covering expenses of medical care. Taxes imposed by any governmental unit do not, however, constitute amounts paid for such medical insurance.
For purposes of this subdivision (b), premiums will be considered payable on a level payment basis if the total premium under the contract is payable in equal annual or more frequent installments. Thus, a total premium of $10,000 payable over a period of 10 years at $1,000 a year shall be considered payable on a level payment basis.
Payments for medical care in 1962 (not reimbursed in 1962) | $16,000 |
Less: 3 percent of $35,000 (adjusted gross income) | 1,050 |
Excess of medical expenses not reimbursed in 1962 over 3 percent of adjusted gross income | 10,000 |
Allowable deduction for 1962 | 10,000 |
Amount by which the medical deductions for 1962 would have been greater than $10,000 but for the limitations on the maximum amount provided by section 213 | 4,950 |
Reimbursement received in 1963 | $6,000 |
Less: Amount by which the medical deduction for 1962 would have been greater than $10,000 but for the limitation on the maximum amount provided by section 213 | 4,950 |
Reimbursement received in 1963 reduced by the amount by which the medical deduction for 1962 would have been greater than $10,000 but for the limitations on the maximum amount provided by section 213 | 1,050 |
Amount attributed to medical deduction taken for 1962 | 1,050 |
Amount to be included in gross income for 1963 | 1,050 |
Amount to be excluded from gross income for 1963 ($6,000 less $1,050) | 4,950 |
Reimbursement received in 1963 | $15,000 |
Less: Amount by which the medical deduction for 1962 would have been greater than $10,000 but for the limitations on the maximum amount provided by section 213 | 4,950 |
Reimbursement received in 1963 reduced by the amount by which the medical deduction for 1962 would have been greater than $10,000 but for the limitations on the maximum amount provided by section 213 | 10,050 |
Deduction allowable for 1962 | 10,000 |
Amount of reimbursement received in 1963 to be included in gross income for 1963 as attributable to deduction allowable for 1962 | 10,000 |
Amount to be excluded from gross income for 1963 ($15,000 less $10,000) | 5,000 |
Payments for medical care in 1956 (not reimbursed in 1956) | $9,000 |
Less: 3 percent of $35,000 (adjusted gross income) | 1,050 |
Excess of medical expenses not reimbursed in 1956 over 3 percent of adjusted gross income | 7,950 |
Allowable deduction for 1956 | 5,000 |
Amount by which the medical deductions for 1956 would have been greater than $5,000 but for the limitations on the maximum amount provided by section 213 | 2,950 |
Reimbursement received in 1957 | 6,000 |
Less: Amount by which the medical deduction for 1956 would have been greater than $5,000 but for the limitations on the maximum amount provided by section 213 | 2,950 |
Reimbursement received in 1957 reduced by the amount by which the medical deduction for 1956 would have been greater than $5,000 but for the limitations on the maximum amount provided by section 213 | 8,050 |
Amount attributed to medical deduction taken for 1956 | 3,050 |
Amount to be included in gross income for 1957 | 3,050 |
Amount to be excluded from gross income for 1957 ($6,000 less $3,050) | 2,950 |
Reimbursement received in 1957 | $8,000 |
Less: Amount by which the medical deduction for 1956 would have been greater than $5,000 but for the limitations on the maximum amount provided by section 213 | 2,950 |
Reimbursement received in 1957 reduced by the amount by which the medical deduction for 1956 would have been greater than $5,000 but for the limitations on the maximum amount provided by section 213 | 5,050 |
Deduction allowable for 1956 | 5,000 |
Amount of reimbursement received in 1957 to be included in gross income for 1957 as attributable to deduction allowable for 1956 | 5,000 |
Amount to be excluded from gross income for 1957 ($8,000 less $5,000) | 3,000 |
26 C.F.R. §1.213-1
For FEDERAL REGISTER citations affecting § 1.213-1 , see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.