Medical Expenses (Nursing home and other)

Pandoras Twist

Hey All,

Trying to study for my tax exam and I've come across a discrepancy between my notes and my book (Irish Taxation Law and Practice 2010)

I understand that nursing home expenses are deducted from Total Net Income

However the lecture notes say that other medical expenses not covered by health insurance (not incl non-prescribed drugs or routine treatments etc.) are given as a non refundable tax credit

However the book has them as a deductible relief from Total Net Income, but at the standard rate of 20%


Can anyone clarify how they are granted and where they go in the tax computation please?

nompere

If you're studying for tax exams you really should be looking at the legislation itself!

Anyway ...

Section 8 Finance No 2 Act 2008 amended S.469 Taxes Consolidation Act 1997. The amended Ss(2) reads as follows:

“(2) Subject to this section, where an individual for a
year of assessment proves that in the year of assessment
he or she defrayed health expenses incurred for the provision
of health care, the income tax to be charged on the
individual, other than in accordance with section 16(2) for
that year of assessment shall be reduced by the lesser of—
(a) the amount equal to the appropriate percentage
of the specified amount, and
(b) the amount which reduces that income tax to
nil,
but, where an individual proves that he or she defrayed
health expenses incurred for the provision of health care
in the nature of maintenance or treatment in a nursing
home, the individual shall be entitled for the purpose of
ascertaining the amount of the income on which he or she
is to be charged to income tax, to have a deduction made
from his or her total income of the amount proved to have
been so defrayed.”

So nursing home expenses are indeed a deduction from total income, and so relieved at the marginal rate of tax; but only for 2009 and 2010, after which they will be relieved at 20%. Other medical expenses are a non-repayable credit calculated at the standard rate of tax.

Form Med 1 asks for the different expenses to be identified so that relief can be granted accordingly.

Pandoras Twist

They're only 3rd year college exams so were not at legislation delving level yet (and thankgod because the wording of that is headache material)

Reminds me of this

https://www.youtube.com/watch?v=SzfiBMRDc5Y

So nursing home expenses are a deductible relief, taken from Total Net Income to get Taxable Income.

After the tax is calculated, 20% of the additional medical expenses are given as a non refundable tax credit

nompere

There was judge who remarked that tax law was easier to understand once he realised that it was written in a foreign language that just happened to use English words.

That passage I quoted is actually quite simple - really!

Pandoras Twist

Can't believe I actually took a tax position in the Big 4. It's going to be painful!

I got some of what the passage said, but the a) and b) bit were confusing. I actually find business law to be easier to read then that passage there. That seemed to go a long way to tell me not much really.