A ruling by the Internal Revenue Service in April 2002 recognized obesity as a disease and said that deductions for weight-loss programs could be allowed for the obese. Before that, weight-loss programs were believed to be deductible only if a doctor recommended them as treatment for heart disease or other conditions.
However, the ruling left much unclear. It didn't address whether exercise programs would be deductible, what definition of obesity would be valid and what happens to deductions if a person goes from being obese to just overweight.
This left people like Clyde L. Posey, a certified public accountant in Ruston, La., a little perplexed.
"There are so many things that are silent in this ruling that it's destined for a great deal of additional confusion," says Posey, who is also a business professor at Louisiana Tech University.
The IRS supplied answers to some questions from Dow Jones Newswires. Taxpayers should consult professionals before taking any deductions in this area.
Q: How is obesity defined and, in general, are different definitions of obesity accepted?
A: The IRS, in its revenue ruling, didn't spell out what obesity is, and an agency official said it will "leave (this definition) to medical science." The World Health Organization, the American Medical Association and the American Obesity Association basically use the same definition: A person with a Body Mass Index of 30 or more is considered obese, while someone with a BMI of 25 to 29.9 is overweight. There are a number of Internet sites that will make the calculations. The important thing is that you have to get documentation from your doctor that you're obese before you can qualify for a deduction.
Q: Are exercise programs deductible?
A: Possibly. If the doctor specifically recommends exercise as part of a weight-loss program to treat a disease, the cost of that may be deducted as a medical expense. Again, you should be sure to get a doctor's note. Also, be careful of trying to deduct expenses for the most high-tech or expensive gym membership you can find. The IRS has already said it will consider the facility's location, the services provided, as well as whether the taxpayer would be able to "safely fulfill his or her exercise need without having to join a health club" to determine whether expenses are deductible.
"Reading between the lines, you get that they're sort of focused on the (idea) that the expense has got to be absolutely necessary," said Mark Luscombe, principal analyst for the federal and state tax group at CCH Inc., in Riverwoods, Ill.
Q: If obesity is now considered a disease, couldn't prevention of obesity -- i.e., general weight loss -- be considered a deductible expense? After all, Section 213 of the Internal Revenue Code provides that uncompensated expenses for medical care are deductible and defines medical care as including the "diagnosis, cure, mitigation, treatment or prevention of disease."
A: Probably not. "We have always taken a strict view of the prevention aspect under section 213," said an IRS official. "The standard we're looking for is imminent danger of coming down with a disease." This means that if you're just a few pounds overweight, it's unlikely that this argument is going to fly. But if you're one or two pounds away from being obese, have a family history of obesity and a doctor says that you need to lose weight immediately, you might have a case. To get any more guidance than this, you may have to wait until a case goes to tax court.
Q: What if you're diagnosed as being obese, join a weight loss program, successfully shed some pounds, and are now just overweight? When do you have to stop taking the deduction for weight loss?
A: That depends upon your doctor's diagnosis. If your doctor tells you to lose 30 pounds, and you get "comfortably below the point" of being obese, then it's likely that additional expenses from a weight-loss program wouldn't be deductible, according to an IRS official.
Also remember that you can only deduct the amount of your uncompensated medical and dental expenses that's more than 7.5 percent of your adjusted gross income.
Q: How many people are likely to be affected by the IRS' revenue ruling?
A: About one-third of the American adult population or 60 million people are considered obese, while 64.5 percent of adults are considered overweight or obese, according to the American Obesity Association. So, these people could potentially benefit from the agency's guidance. Many don't have enough medical expenses to qualify for a deduction under the 7.5 percent AGI rule, although the cost of weight-loss programs, in some cases, could allow more people to meet this bar. In 2000, the latest year for which figures are available, only 5 percent of taxpayers deducted any medical expenses, according to the IRS.
