Health-related expenses and fiscal obligations: regulations and exemptions
Health-related expenditures, like therapy sessions and doctor consultations, can be considered an extraordinary financial strain in tax declarations under specific circumstances. However, this exemption applies solely to medication expenses when accompanied by a valid medical prescription or receipt.
As explained by Daniela Karbe-Geßler from the Taxpayers' Federation, if a person is dealing with persistent or chronic health issues, a single certificate is sufficient to cover all medication expenses and treatments involving the condition. No further certificates are required for subsequent purchases.
Additional stipulations: Exceeding reasonable personal expenditures
In order for medical expenditures to be deductible on taxes, they must exceed the reasonable personal financial commitment. This threshold ranges from 1% to 7% of the total income, and varies depending on earnings and family status. Individuals with high income and no children need to spend more on health expenses before they become eligible for a tax reduction.
Another rule to qualify for deducting health-related expenses is that they should be unavoidable. This applies if the taxpayer can't avoid incurring these expenses due to legal, factual, or moral obstacles. This includes costs associated with:
- treating diseases,
- making the illness more manageable, or
- reducing its negative consequences.
The origin of the illness, whether due to self-inflicted risks such as unhealthy habits or hazardous sports, doesn't affect eligibility for the deduction.
Theoretical vs. Practical: BFH debates cancer supplements case
What may seem straightforward theoretically might prove complex in practice. For instance, the Munich Finance Court (Case no. 15 K 286/23) has been grappling with this issue. Can dietary supplements for cancer patients be deemed unavoidable, leading to a valid tax deduction? Surprisingly, the court didn't reach a definitive conclusion, but an appeal has been lodged.
Now, the Federal Finance Court (BFH) must decide upon the case (Case no. VI R 23/24). Taxpayers facing the same dilemma are advised by Karbe-Geßler to file an objection and apply for suspension of the proceedings. This keeps the tax notice active until the BFH makes its decision.
In some cases, individuals may need to submit a tax declaration that includes the expense of purchasing tax declaration-eligible cancer supplements, if these supplements are prescribed by a healthcare professional as part of the treatment plan and are considered unavoidable medical expenses. Understanding the rules and stipulations around exceeding reasonable personal expenditures and the unavoidability of expenses is crucial when determining whether these supplements can be deducted from taxes.
