Getting help from a counselor for mental issues can be just as important as seeking help from a doctor for physical aliments. But, it can be pricey, especially if your insurance plan doesn't cover it. Depending what you're seeking counseling for, you might be entitled to a tax write-off.
Deductible Counseling Defined
Only counseling done to cure or prevent a physical or mental defect or illness can qualify for the medical expenses deduction. These include psychiatric care, psychologist visits and psychoanalysis for things like depression and other mental illnesses as well as sexual inadequacy or incompatibility. If the counseling isn't for treating or preventing a mental defect or illness, you aren't allowed to deduct it. For example, if you and your spouse are having difficulties communicating, you might seek help from a marriage counselor. However, you wouldn't be able to deduct these on your taxes because you're working out relationship issues rather than seeking treatment for a medical condition.
If the counseling qualifies as tax deductible, you can include the costs of counseling you pay for yourself, your spouse and your dependents, as long as the costs were either paid or incurred while the person was your spouse or dependent. For example, say your son is depressed while in college and he's your dependent. If you get the bill the next calendar year when you aren't claiming him as a dependent anymore, you can still count your payment as a deductible medical expense, because he was your dependent when the cost was incurred.
You can't get a tax break for money you don't actually pay yourself. If the counseling is covered by insurance, or you receive reimbursement to cover what you paid, those costs can't be included in your deduction. For example, say your counseling usually costs $100 per visit but your insurance covers $90 of that. You can only deduct the $10 you pay out of pocket per visit. However, if you're paying for the premiums on the insurance with money that's included in your taxable income, you can add the premiums to your list of expenses.
If you're not itemizing, your deductible counseling expenses won't reduce your taxes no matter how much you paid. Even when you itemize, the deduction is limited to the portion of your expenses that exceeds 10 percent of your adjusted gross income, as of the 2013 tax year. For example, say your AGI is $75,000. Unless your deductible medical expenses, including your counseling costs, exceed $7,500, you won't be able to deduct any of them. Even if the costs exceed 10 percent of your AGI, you're limited to deducting just the excess. So, if you had $9,000 in costs, you could deduct $1,500.
- Blue Cross Minnesota: Which Medical Expenses can be Paid for With Tax-Deductible HSA Funds?
- Georgia Tech: Medical FSA and HSA Expense Eligibility List (IRS Code Section 213 (d) Eligible Expenses)
- Fordham: Eligible and Ineligible Expenses
- Internal Revenue Service: Publication 502 -- Medical and Dental Expenses
- Internal Revenue Service: Topic 502 -- Medical and Dental Expenses
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