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IRS Approves Medical Expense Deduction for Genetic Testing

Wolters Kluwer Tax & Accounting explores expansion of the definition of qualified medical expenses

What: In recent years when presented with the opportunity, the Internal Revenue Service (IRS) has identified a number of expenses as qualifying medical expenses for purposes of the itemized deduction for medical expenses or for qualified distributions from health savings accounts or flexible spending accounts. These have included smoking cessation programs, weight loss programs, and gluten-free products for celiac disease. Now, in a private letter ruling, the IRS has spelled out the circumstances under which genetic testing might qualify as a medical expense. 

Why: While private letter rulings cannot be relied upon by taxpayers other than the taxpayer to whom it was issued, the ruling on genetic testing does indicate the IRS thinking on the matter and how they might treat similar situations:

  • Only the cost of genetic tests directly related to health assessments qualify for the deduction
  • Costs related to ancestry information or other information not related to health would not qualify
  • The IRS ruling may be limited to direct-to-consumer genetic testing kits that have been authorized by the Food and Drug Administration to be marketed as medical devices
  • Health-related information could include testing for predisposition to identified diseases, carrier status of identified diseases, as well as general wellness information and genetic health counselling
  • The provider of the genetic testing may be able to specify the portion of the cost that is considered health related

Who: Federal tax expert Mark Luscombe, JD, LL.M, CPA, Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting, is available to discuss these developments with respect to genetic testing and qualified medical expenses in general.

PLEASE NOTE: The content of this article is designed to provide accurate and authoritative information in regard to the subject matter covered. The information is provided with the understanding that Wolters Kluwer Tax & Accounting is not engaged in rendering legal, accounting, or other professional services.

STAMFORD, Conn. and LUCCA, Italy – Fugro, a leading Geo-data specialist has selected Wolters Kluwer’s CCH Tagetik solution to replace their former financial consolidation system.

Fugro selected CCH Tagetik, powered by SAP HANA, against competition from two other software providers. Fugro was seeking the flexibility to address strategic aims mainly in financial planning and data analytics including predictive analytics.

Headquartered in The Netherlands, Fugro unlocks insights from Geo-data about factors such as topography, soil composition and environmental conditions which affect structures, to help clients build and operate their assets safely and sustainably onshore and offshore. It has more than 10,000 employees in 65 countries.

Fugro will use CCH Tagetik for annual reporting; budget modeling; consolidation of budget data; statutory and management consolidation and reporting; forecasting (including monthly forecasts); calculation for IFRS16 requirements. Documental disclosures will be handled with the embedded Collaborative Office.

Fugro also had a very positive experience using CCH Tagetik for its IFRS16 process implemented in 2018 in partnership with Satriun.

“During an intensive proof of concept, Fugro was impressed by the unified platform we offer for statutory and management consolidation, operational and financial planning, and our solution for regulatory requirements, all enhanced by the Collaborative Office,” says Fabrizio Tocchini, Managing Director at Wolters Kluwer, CCH Tagetik Benelux & Tagetik Nordic. “Capabilities such as the standard functionality of CCH Tagetik without the need for scripting or programming proved very attractive. Based on previous experience Fugro wanted to avoid a solution which relied on internal IT support for functionality.”

About Wolters Kluwer
Wolters Kluwer (WKL) is a global leader in professional information, software solutions, and services for the healthcare; tax and accounting; governance, risk and compliance; and legal and regulatory sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with advanced technology and services.

Wolters Kluwer reported 2018 annual revenues of €4.3 billion. The group serves customers in over 180 countries, maintains operations in over 40 countries, and employs approximately 19,000 people worldwide. The company is headquartered in Alphen aan den Rijn, the Netherlands.

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Contact: To arrange interviews with Mark Luscombe, other federal and state tax experts from Wolters Kluwer Tax & Accounting on this or any other tax-related topic, please contact: