Discussion:Client's statement of medical expenses

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Discussion Forum Index --> Tax Questions --> Client's statement of medical expenses


Jake (talk|edits) said:

10 March 2007
Client gave me a piece of paper that said - Medical Expenses, $10,328.56.

Can I just accept that at face value? I decided to send her a letter, pointed out that the two biggest misunderstandings are that (1) you cannot deduct pretax medical insurance, and (2) you must take into account any medical insurance reimbursements. I provided a copy of the Proseries Medical Expenses works sheet with categories. Then I included the entire IRS Medical Expenses Deduction publication for her reading enjoyment.

If she comes back and says in her opinion its all legit - do I just plug in the number?

I think I have done my due diligence. The actual tax savings is about $650. Anything I am missing?

Kevinh5 (talk|edits) said:

10 March 2007
You are responsible for determining that the client has complied with the law. So all you have to do is ask "does this include your health insurance taken out of your paycheck?" If yes, you determine how much was pre-tax, etc. All you have to do is ask a few questions of the client.

Jake (talk|edits) said:

10 March 2007
Med Ins taken out of a paycheck is not always pretax. When my wife's employer first offered that option they were told that you might not want to do that as it reduced social security earnings and therefore reduced the eventual social security pension amount. I do not know if anyone ever did decline the option of reducing their taxes now vs. the promise of a slightly larger social security pension amount later. Electing to pay med ins after tax would only benefit the lowest paid workers as social security replaces 90% of the lowest tier average monthly earnings; 35% of the next tier; and 15% of the highest tier.

Blrgcpa (talk|edits) said:

10 March 2007
Not all employers offer 125 cafeteria plans. In that case health ins is paid with after tax dollars.

Death&Taxes (talk|edits) said:

10 March 2007
If in doubt, ask to see a pay stub.

DZCPA (talk|edits) said:

11 March 2007
Why did you send her a letter?? Do you have telephone service where you live? Ask her what is included in the number and then proceed doing the return. You are allowed to trust your clients. Hard to do at times...I know...

PVVCPA (talk|edits) said:

March 11, 2007
I remember this one time I asked a client what his large medical expenses were. He himmed and hawed and then embarrasingly admitted that he goes to therapy for his depression. I felt bad for asking, especially when we found out later that he didn't exceed the 7.5%. Woops!

Jake (talk|edits) said:

12 March 2007
Why send a letter? - I find it a lot more efficent to use written communication or e-mails. Plus - it is better documented. I will call her and say "after reading my letter etc. is that # still o.k.?

RSRAGENCY (talk|edits) said:

12 March 2007
I have always had this problem!! So, I make a photo copy of their figures, and document that I questioned the client....CYA....

Deback (talk|edits) said:

March 12, 2007
I agree with most of the responses. I would have called and asked her if any of the health ins premiums were pretax or asked to see a paycheck stub. Also, was the mileage included in the total amount? If not, ask her for the total medical miles. You might ask for a breakdown of the type of expenses she included in the total amount.

DZCPA (talk|edits) said:

12 March 2007
Jake,, I find the phone the quickest way to an answer, more efficient and cost saving. I do not need any more documentation then that little piece she already gave you. It is ok to trust your clients. There is no way possible I could have grow my practice if I had to write letters for all the large deductions noted by clients. Do your clients prefer to write you back with a letter or perhaps call you?

Death&Taxes (talk|edits) said:

12 March 2007
And times like these is why we interview, whether by phone or in person. I find many clients want to unburden themselves about troubles that have cost money: children in drug rehab, their own or spouse's depression and the like.

RSRAGENCY (talk|edits) said:

12 March 2007
HOW TRUE!! My husband has made me a 'drop-off' box on our front porch (my office is thru the back) so clients just need to drop-off...it's SO much easier on them................and on me.........I LOVE my people, but by the end of a full day of interviewing, I am exhausted. I hear about their lives for the past year, happy events, sad events, etc. One client even called me her 'confessor' It's true...But it can be very upsetting listening and feeling for each one's troubles. When they come to pick up, they're usually quicker, so we only have a bit of time to talk.

Bottom Line (talk|edits) said:

12 March 2007
Agreed that I'm considered a "mother confessor". I do very few "while you wait" returns but the conversation while I'm doing it does build customer loyalty.

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