(Reviewed and Updated February 2022)
It’s a good year to revisit patient advocacy services and income taxes. Our first review came in 2010. We looked again in 2013. While little (maybe nothing) has changed, this year I have a new suggestion for you – a bit of a twist.
In question is whether or not your patient advocacy services should be included in the list of medical expenses that allow them to be deducted from your clients’ income taxes; whether they can be used to reach that 10% or 7.5% threshold that allows them to be deductible (for the IRS). This is all not-so-clearly spelled out in Publication 502 from the IRS and on this list of eligible medical expenses from the CRA.
If your services ARE deductible, that’s a huge WIN-WIN – for you and your client. It makes your services more affordable.
But “not-so-clearly” is still a problem in 2015 (and 2022). As mentioned in previous years, patient advocates or navigators or health advocates or coaches – none of these are specifically included in the list of what can be deducted. Many forms of advocacy are covered – but not using any of the terms we use for our work. We just don’t call ourselves the same names as those services listed.
Until the deductibility of patient advocacy services either shows up on the list all on its own, or is tested during an audit, we can only guess that they will be, some day, a bona fide, deductible expense.
But it is most certainly an educated guess. Within the existing list, we have plenty of evidence that the services we provide as advocates are/will be eligible expenses, as follows:
This is the type of evidence an accountant could argue during an audit. For example, from Publication 502 from the IRS*:
- Christian Science Practitioner expenses can be deducted. Christian Science practitioners provide “spiritual treatment through prayer that results in healing.” How patient advocates can use this information for support: our work is all focused on providing peace of mind to our clients, similar to the peace of mind a Christian Science Practitioner would provide through prayer.
- Nursing Care expenses can be deducted. Of course, as mentioned above, we do not provide nursing/clinical care in our patient advocacy role. But we do provide nursing-similar services that would qualify. For example, we might set up a system to help Mr. Jackson take all his medications in the right dose at the right time, improving his medical adherence. Or we might accompany Mrs. Jacobson to her doctor appointment and help her better understand the doctor’s suggestions and recommendations. Or we might sit by Mr. Mason’s bedside to keep him safe in the hospital. In all cases, these improve their medical outcomes. A KEY piece of evidence is this statement: “The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse.”
- Guide Dogs and Service Animal expenses are deductions. (You all know this is my favorite metaphor!) Yes – I believe we, as advocates, are very closely aligned to these services, described by the IRS as “You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities.” OK – so certainly it seems that if you can deduct an animal who provides guiding services, you should be able to deduct a human professional!
- Legal Fees for mental health can be deducted as long as they are focused on “health”. Our professional services, much like legal services, are all, always, focused on “health.”
- Long-term Care Services/Maintenance and personal care services are described as ” care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities.” Of course, many of us work with people with sudden, acute illnesses or injury, too – but the spirit is the same.
As you can see, despite that fact that we patient advocates aren’t specifically named on the list, exactly what we do and how we do it is described among many of the items that ARE on the list.
So, remembering that I am not an accountant or tax professional* – I make this suggestion – a twist on previous ideas:
I suggest you add a statement like the following to the bottom of your invoices:
Keep this receipt. These services may be deductible on your annual income tax filing. Consult with your tax preparer.
That helps your client know of the possibility, but doesn’t make any specific claims as to the deductibility of advocacy services. If it makes sense, you might even link them to this post to help them have the discussion with their tax preparer.
WIN-WIN – for you and your client, too.
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*A loud and clear reminder that I am NOT a tax preparer, a tax attorney, an accountant or CPA or any sort of professional who claims to know anything about how the IRS or CRA thinks! But I am all about deducting anything possible from income taxes and not paying a penny more than I actually, legally, owe.
