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The IRS considers professional counseling sessions to be qualified medical expenses for the purpose of lowering your taxable income. But for you to claim any health costs in your tax return, they must total more than 7.5 percent of your adjusted gross income, or more than 10 percent starting in 2013. The deductible amount is anything in excess of those amounts.
To claim your counseling sessions as a deduction, you must itemize your tax write-offs on Form 1040, Schedule A. If you use the standard deduction that the IRS computes for the different groups of taxpayers, you cannot subtract the cost of your counseling sessions from your gross income. It is more advantageous to take the type of deduction -- itemized or standard -- that results in the largest deduction.
Record the total you spent in therapy sessions in a tax year on the appropriate line in Schedule A. The form’s steps guide you to calculate the amount that is over 7.5 percent of your AGI. Then, continue to add to the schedule all other deductible expenses you are eligible to claim. They include, but are not limited to, mortgage interest, the portion of other health and dental treatment not covered by health insurance, and property taxes. Tally the payments you made to reach your total itemized deductions. Transfer the figure to page 2 of Form 1040 to subtract it from your income.
Whether you file a paper or electronic tax return with the IRS, you should not include any receipts with it. However, since the IRS may choose to audit your return, you must keep invoices and statements that prove you paid for the professional counseling sessions you claimed as a medical deduction. Note that if your health insurance policy reimbursed you in full or partially for the therapy, you may only write off your actual out-of-pocket expense. As payment proof, the IRS accepts bank, debit and credit card statements, as well as cancelled checks and signed receipts that clearly show who received the money, the amount and date of the payment, and the service provided.
The U.S. tax code gives the IRS the authority to audit your tax returns in perpetuity if the agency suspects you knowingly submitted fraudulent information. But even in the absence of such suspicion, the federal agency may ask you to explain your return for up to seven years after you file it. Thus, at a minimum keep the receipts for your counseling sessions that long.
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