As tax season kicks off, the Internal Revenue Service is warning taxpayers and administrators of health spending plans that personal expenses for general health and wellness are not legally considered medical expenses, as it fears some may be misled.
In a press release published Wednesday, the IRS reminded individuals filing their taxes that medical expenses for areas such as weight loss are not deductible or reimbursable under health flexible spending arrangements, health savings accounts, health reimbursement arrangements or medical savings accounts, and that they should beware of companies suggesting otherwise.
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"Legitimate medical expenses have an important place in the tax law that allows for reimbursements," said Danny Werfel, the IRS commissioner, in a statement. "But taxpayers should be careful to follow the rules amid some aggressive marketing that suggests personal expenditures on things like food for weight loss qualify for reimbursement when they don't qualify as medical expenses."
According to the IRS, while some companies claim that a doctor's note based on self-reported health information is enough to qualify a nonmedical nutritional, wellness or exercise program as a reimbursable medical expense, that's not the case. Legally, such a note does not back a targeted diagnosis-specific activity or treatment that would qualify as a medical expense, but simply a personal expense.
Essentially, food is not a medical expense, and companies that offer to provide a doctor's note to support a potential flexible spending account claim are misleading clients, according to the IRS.
"FSAs and other health spending plans that pay for, or reimburse, non-medical expenses are not qualified plans," the IRS wrote. "If the plan is not qualified, all payments made to taxpayers under the plan, even reimbursements for actual medical expenses, are includible in income."
As millions of Americans get ready to file their taxes, the IRS is also reminding taxpayers that they're generally required to report all earned income on their tax return, including income earned from digital asset transactions, foreign sources, the gig economy and the service industry. Digital assets include cryptocurrency, convertible virtual currency, stablecoins and non-fungible tokens.
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Such requirements from the IRS sometimes go viral on social media. Recently, a user posted on X, formerly Twitter, the revenue service's request that taxpayers report income from illegal activities, including drug dealing and theft. The post has received over 27 million views.
This year's tax season has seen almost 1 million Americans file their tax returns with the IRS's free tax service, Free File, the IRS said. The service allows taxpayers with an adjusted gross income of $79,000 or less to prepare and file their yearly federal return with guided software free of charge. The service is in partnership with eight tax-preparation companies.
The IRS has also launched Direct File, a free service that allows taxpayers to file their returns directly with the IRS, in 12 states: Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
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